Read on Twitter
LEVERAGE
Please quit viewing leverage as the slider on the exchange that you can move to 100X. View leverage from the perspective of your total portfolio. If you have a $10,000 account and are willing to risk $200, figure out where your stop is and take $200/(% of stop).
Please quit viewing leverage as the slider on the exchange that you can move to 100X. View leverage from the perspective of your total portfolio. If you have a $10,000 account and are willing to risk $200, figure out where your stop is and take $200/(% of stop).
If the stop is 1% away from your entry:
200 / 0.01 = $20,000 position
Your leverage is 2X. That slider that goes up to 100X does not mean that you're risk is increased if you pre-determined your risk using your position size and stop loss.
200 / 0.01 = $20,000 position
Your leverage is 2X. That slider that goes up to 100X does not mean that you're risk is increased if you pre-determined your risk using your position size and stop loss.
Do you need to use 100X to open the position? If so, why? Are you over-sized? Are you keeping capital off the exchange and making up the difference with leverage? Are you electing to use the liquidation price as your stop loss? (if so, ensure that your margin is isolated)
Cross leverage can be confusing and it WILL get you liquidated if you don't understand how to use it. As long as you are pre-determining your risk in a trade, cross leverage is an easy way to open positions and keep collateral available.
I'm asked pretty constantly what leverage I use. http://ftx.today allows you to pre-set a max leverage. Mine is typically pre-set to 10 or 20X. They use a cross leverage system though. Each position you open is using your entire collateral.
To isolate margin on FTX use subaccounts. The slider on FTX simply says that if you have 10,000 in capital, you can not open positions larger than 10,000 multiplied by your max leverage. It should be a very rare occasion that you are opening positions of 10X your portfolio.
If you're risking 2% per trade, you'd only open 10X your portfolio if your stop is 0.2% away from entry. Manageable on low timeframes.
Your stop would have to be 0.02% away from your entry to 100X your portfolio and maintain 2% risk. If you're pulling this off then applause.
Your stop would have to be 0.02% away from your entry to 100X your portfolio and maintain 2% risk. If you're pulling this off then applause.
However, you could still 100X your *account* IF you're not keeping all of your *portfolio* there and using leverage to account for that.
So quit thinking about leverage based on the slider. Think of it based on your portfolio and focus on how much you're risking in a trade.
So quit thinking about leverage based on the slider. Think of it based on your portfolio and focus on how much you're risking in a trade.
