How To Trade Using Leverage Safely On Bybit
Once someone has dabbled in trading cryptocurrency, the next logical step is to improve their trading strategy and maximise their profits. Leverage trading is one way traders can maximise their profits once they have established a successful trading strategy.
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There are many cryptocurrency exchanges out there, but Bybit is one of our favourites for beginners and experienced traders alike, thanks to its streamlined functions and easy-to-use interface.
Bybit allows traders to leverage trade cryptocurrency derivatives with up to 100X leverage, making it hugely attractive to many traders. Get a $1500 bonus by signing up through our referral link here.
Trading with leverage allows traders to multiply their gains (or losses!) by up to 100X. For example, if a trader has $1000 in their trading account, by leverage trading on Bybit, they can actually execute trades to the value of up to $100,000.
Catching a 1% move, they would then make a 1% profit on the $100,000 trade, rather than just their $1000. This means with a 1% move, a profit of up to 100% can be realised – making it obviously very attractive to some traders.
On the other side of the coin, however, a 1% loss would result in up to a 100% loss if using maximum leverage. This makes trading with leverage a very high risk, high reward activity.
We would never recommend placing a 100X trade with your entire trading account, as it doesn’t take much to get liquidated and lose your entire trading balance. Most profitable leverage traders rarely use more than 10X leverage, with 3X-5X being the norm.
The exception would be when a trader increases the leverage on an existing position that is profit, freeing up capital with which they can place another trade, whilst placing a stop-loss at break even on their existing trade, so as to make it safe.
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Leverage Trading Strategies
So, how does one go about leverage trading?
When you log into Bybit, there are a few marketplace options. Simply click on the derivatives option. Within derivatives, there are three leveraged trading options:
- Inverse perpetual: allows you to leverage trade using a given cryptocurrency coin as collateral.
- USDT perpetual: allows you to leverage trade using USDT as collateral.
- Inverse futures: allows you to leverage trade futures using A given cryptocurrency as collateral.
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Using Indicators Within Your Strategy
In bull markets, leverage traders tend to use the inverse perpetual function, holding onto crypto that is going up in value and using it as collateral to multiply their crypto holdings. In bear markets, leverage traders tend to use the USDT perpetual function, holding on to USDT and using it as collateral for leveraged trades.
So, to start leverage trading, select your desired leverage trading option, and transfer some collateral to the selected wallet. The trading functions work almost identically to trading on spot – you can execute limit trades, market trades and conditional trades.
In order to apply leverage, toggle the leverage button above your order input. Firstly you will want to choose between cross and isolated mode. Using cross puts your entire account at risk of liquidation, whereas isolated only risks the corresponding capital you allocate to the trade – so we recommend always using isolated mode.
Next to this you can choose your leverage – from 1X to up to 100X, depending on your cryptocurrency. The higher the leverage you choose, the more gains you can make, and the more losses you can make – so be very careful!
Always check your liquidation price before entering a trade, and make sure it is within your risk management strategy. Just like with spot trading, you can use stop-losses and take-profits.
Due to the high risk nature of leverage trading, it is vital you have a proper trading strategy and use reliable indicators and algorithms to validate your trades. You can find some of the most accurate trading indicators and algorithms in MDX ALGO – containing four fantastic trading indicators:
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Essential Risk Management
These trading indicators have brought many traders success, and have been back tested thoroughly to achieve optimum results. Many leverage traders in our community rely on these indicators to either find trades, or validate their own trade ideas. To find out more about the MDX Premium trading indicators, click here.
To reiterate – it is vital when trading, especially when trading with leverage, to trade with a strict risk management policy. We would advise to never risk more than 1% of your trading portfolio on a single trade. To find out more about risk management, and the best ways to manage risk when trading, join our community of traders at MDX ALGO.
MDX ALGO is not limited to just indicators, it also boasts one of the most elite trading communities on the planet, where experienced and novice traders come together to share trading tips, ideas and strategies.
MDX ALGO also shares weekly Altcoin picks, MDX’s Altcoin portfolio, a highly streamlined trading portal that brings all the best aspects of crypto into one easy to use interface, and even lets you make money through the MDX Referral Program.
To find out more about MDX ALGO, or to join the leading crypto trading community in the world, click here. Happy trading!
