That is the power of trading on margin when you are correct in your predictions and you make a profit. It is not impossible to make these kinds of gains in the crypto market since the volatility of the coins definitely approves of a 15% gain in any single day. Keep in mind that this is a best-case scenario where we have used a high leverage ratio as an example. Standard spot trading where you trade a spot market without leverage. The difficult part is to enter the trade with precision since your liquidation price is going to be very close to where you entered.

What happens if you lose on a leveraged trade? It doesn’t matter how much leverage you use it is always the open position size that is calculated. We will take a look at the difference between leverage from x5 to x200. The loss is always calculated on your position size. In this table, we calculate the potential profits of a 5% gain with the same position sizes and the same levels of leverage. This table shows how much capital you will be able to control in active positions in the crypto market. This table indicates the maximum position size you can take with different account sizes from $500, $1000, $5000, and $10,000.

Crypto Trading Patterns

Short-selling a cryptocurrency can only be done on brokers. To bet on a falling market is seemingly more difficult. This is something that you should take notice of. While most investors buy cryptocurrencies and hold on to them for long-term gains, many day traders use margin platforms to benefit from short-term negative price movements. Exchanges that offer leveraged contracts. This means that if you increase your position size 15 times, the commissions will increase 15 times as well. Should be practiced with a smaller stake in the beginning. This style of investing can be extra profitable during a crypto bear market. Your fees are directly connected to the size of your position.

Since cryptocurrencies are regulated differently in the US we have not yet seen a hard rule on leverage trading. The SEC in the United States (Click On this page) considers digital assets to be securities, while the CFTC sees them as commodities. What is the maximum leverage for crypto in the USA? The taxation and regulation will therefore be different and it is not yet 100% clear in which direction the regulatory bodies in the country will go.