Tron Fan Club| Understanding Leverage Trading In Crypto Market - By @solexybaba| 10% payout to the community account

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Hello to everyone in this great community known as the Tron Fan Club I welcome you all to a great weekend. hope we are all doing just perfectly well. today I am here again to discuss an important topic about cryptocurrency trading which I have tagged understanding leverage with derivatives trading. at the end of this lesson, I strongly believe that we all will understand what leverage is all about in crypto trading and how to insert this leverage before, within, and after we must have executed our trade be it a buy trade or a sell trade. I urge you all to relax and take a calm breath as I drop my entry.

WHAT DO WE UNDERSTAND BY THE WORD LEVERAGE TRADING STRATEGY?

screenshot from Binance

When we talk about leverage strategy in trading, it is a particular strategy that is been executed in multiple areas. It is a strategy that requires little task and then comes with more profits. with the leverage trading, investors such as traders are allowed to execute trades with multiple positions which are likely to be bigger than the money in their trading wallet. that is to say, with the leverage trading, certain traders can have access to greater funds with just a little cash in their wallets.

Of course, the leverage trading strategy is highly enticing and has shown great attribute of profiting users so well, with little funds one can get access to bigger profits, and again we should all bear it in mind that, where there is a high reward, come great risk. so the leverage trading strategy involves high risk, the reason is, when making a trade entry and getting a particular point to execute either a buy trade or a sell trade there is every possibility to make gains and also there are tendencies of making losses too. so both incidents, one is inevitable. one can either gain profits or lose funds while using the leverage strategy in trading.

A novice should take solid caution when making use of the leverage strategy while trading in other not to lose funds as though this strategy can lure a trader especially novices to make certain decisions that may likely go wrong it is highly profitable when the trade go toward your favor but it is highly risky especially when the trend took another trend which is contrary to what you have executed initially.

Allow me to further buttress my point, let's say, for instance, an individual who is trading in the crypto market decided to fund his trading account with $1000 and knowing fully well that the account is having a 100:1 leverage position. with this, the trader is at liberty to execute multiple trades more than the amount he has used to fund his account. so with that, a user is liable to execute several trades. the initiative of leverage is a good one as though one can use a small number of funds to cash out bigger profits but if the leverage is not properly managed, one can lose all the funds in his account.

It is always recommended that traders should not be greedy when making a trade using the leverage strategy, and also get a close look at the market, make sure you analyze the market thoroughly before you execute your trade alongside your leverage. yes, we all know it is highly profitable but then we should not forget the fact that it can also do away with our funds' hen ever the trade goes against us. and whenever the trade goes against a trader, the funds in his account will be liquidated as though the trade has affected both the funds we used to place the order and also the funds that are left in our account.

WHAT ARE THE MERITS THAT COME WHEN USING LEVERAGE TRADING?

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The leverage is very beneficial to traders who know more about adjusting and initiating leverage positions while trading. a few of these benefits are seen below.

• The major benefit of leverage trading is that it enables individuals to execute trades that are greater than the current funds in their account. so with that one can make use of little funds to gain access to greater profits in a short while.

• Another interesting part regarding the leverage strategy is that it enables traders to receive part of their gains which are already seen in their account regarding a trade they executed and this can happen without a trader not necessarily closing the trade that has been executed.

• In leverage trading, a trader's profit doubles when a trade is been executed. so with that, a trader is sure to get more gains and then make more money in just a short timeframe.

• In leverage trading, an individual can take as many positions as he or she intends. it gives room for traders to execute their trade orders with bigger positions irrespective of the funds in their account.

• We can also use the leverage trading in other to place a trade order that we feel is possible and will go toward our favor as though we are sure of the trade and this is the scenario in which an individual enters the market and stays a little while then go out from the trade with his or her profits, which is regarded as a scalp trade.

CERTAIN DEMERIT WHEN USING LEVERAGE TRADING

We all know whatsoever that whatever possesses certain advantages also has certain disadvantages. leverage trading also is not an exception as though there are certain disadvantages when using the leverage trading strategy, and a few of the disadvantages of leverage trading is seen below.

• Number one demerit of leverage trading is that it comes with greater risk when one is executing a trade with the leverage trading strategy. the risk involves in this strategy is greater than other risks in the crypto market trading.

• The aspect of liquidation comes in whenever a trader's order has gone against his order which he has executed and this is a great turn down as one could lose all his/her funds in just a blink of an eye. this incident has occurred to me before, I was sent a message from binance telling me that my account has been liquidated and as such they have to close all positions for me, and then I got up to see my funds gone.

• In leverage trading, just the way we make great gains when the trade moves toward our favor, we get to see great loss when the trade takes a different direction which contradicts the position we already executed earlier.

• When the trading has gone contrary to what you have ordered initially and it is already affecting your capital in your account, you will be notified to top up your wallet in other to make up for the money that has been lost in that particular trade.

HOW CAN ONE EXECUTE THE LEVERAGE TRADING WITH CERTAIN TRADING STRATEGIES?

Here I will be showing us some specific indicators that I am very conversant of. and these indicators can also be made use of when executing trading alongside the leverage trading the indicators are powerful to use in such kind of trade and they are as follows.

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MOVING AVERAGE INDICATOR

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This indicator known as the moving average indicator is well known among most individuals who are trading cryptocurrency. as though its function is to point out the support and resistance level of a currency alongside the price trend regarding a cryptocurrency. so it is effective and efficient to use as though one can see the movement of the price within the support and resistance level on a chart.

How traders know this, is by looking closely at the indicator when being employed in the chart for a proper analysis. here we are like to see the indicator as a line that is moving alongside the price of the cryptocurrency in the trading chart. a downtrend market can be detected when we notice the line above the candle sticks on the main chart and also we can point out an uptrend when we notice that the line is beneath the candle sticks then thus indicating a bullish market.

screenshot from TradingView.com

With the moving average indicator, a trader can have a close look at what the price is saying and whether it is an uptrend movement or a downtrend movement before selecting the position to take and what kind of order he is likely to execute.

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PAROBOLIC SAR INDICATOR

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The parabolic Sar indicator is also a great indicator that most individuals make use of in analyzing the trading chart before executing a trade. this indicator helps one to know the next trend in the market. it is comprised of certain dots showing the movement of the asset in the market and also the possible trend the market is likely to take in a short while.

We can as well notice a downtrend in the price of an asset when we get to see the dots above the candle sticks and as such it has indicated that sellers are in the market and selling the asset off, so as a trader, this is a sell notification signal to execute a sell trade in the market also we get to see an uptrend in the market when we see the dots beneath the candle sticks and a such thus indicate a buy notification signal, and as traders, this is a signal to execute a buy trade in the market.

screenshot from TradingView.com

As seen in the chart above, the Parabolic Sar indicator as well as some possible information regarding the movement of the dots that are seen in the market.

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STOCHASTIC OSCILLATOR INDICATOR

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This indicator is a wonderful indicator as though it assists traders to know the direction and movement of an asset in the crypto market. it is a great indicator that tells us when a digital currency is either in an overbought region or in an oversold region. and the indicator is seen as two lines that move in a specific motion alongside the direction of the asset price in the crypto market.

To know when the crypto asset is in an overbought region, we get to see the stochastic lines fall in the range of 80 and above, while to know when the digital currency is in an oversold region, we get to notice the stochastic lines fall in beneath 20 and further below it. so when the price is in the overbought region, this indicates that buyers are currently dominating the market and hence a buy trade is to be executed and thus this is a signal to buy traders.

And when we notice the price of an asset in an oversold region, this indicates that sellers are currently in charge of the market, and hence a sell signal is given to traders who wish to execute a sell trade in the market.

screenshot from TradingView.com

As seen in the above chart, the stochastic indicator has been applied, and then the oversold position, as well as the overbought position, are well marked. also, we get to see the movement of the price both in an overbought and also an oversold region well mapped out.

CONCLUSION

Leverage trading strategy is a wonderful strategy that assists traders to make double profits compared to their capital in the account but in as much as it profits users, it is also very risky as though users can eventually lose their money totally in their account when making use of the leverage trading strategy.

One is not expected to be greedy as we all know that greed is very bad and it typically leads to destruction. so it is better to understand the leverage trading so well before making use of a higher leverage position. as novices in trading, it is expected that you open a small leverage position to be on the safer side. a better understanding of leverage trading will help you to minimize losses that are likely to occur.

Thank you all for taking the time to read my publication. I hope it has been beneficial to you.