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Leverage

this thing is about to smash the market into little tiny piecesarent we all glad we reinvested early in semiconductors? i sure am. the short semiconductor etf is going completely insane. expect that to continue. if you look at the 5 minute you can see we are poised for breakout. we will probably go outside upper envelope, swing back to value area low before moving higher. i dont see anything thats going to stop the total collapse of the semiconductor industry as we know it, do you?
AMEX:SOXSLong
by cerealpatterns
FTM Could be long Due to Pure PA With Proper RMI Have draw A chart of FTM/USDTPERP and during analysis found to price action scenario with bullish moment. First It's Inverse H&S Pattern and Second Bullish flag. Both Patterns are pure bullish but seeing a market now days totally sideways or ranging so if I trade this pair so I'm calculate Risk Management with safe side Margin %age. Because everyne knows trading is risk so when market gave pattern then Should be pick a opportunity.
Long
by mobi3582
1
EXPLAINED: Gearing and how it worksThere is one tool with trading, which you can accelerate your portfolio, compared to with investing. I’m talking about Gearing (or leverage). To wrap our head around this concept, here’s a more relatable life example. When you buy a house for R1,000,000, it is very similar to trading derivatives. Initially, the homeowner most probably won’t have the full R1,000,000 to buy the house with just one purchase. Instead, they’ll sign a bond agreement, make a 10% deposit (R100,000), borrow the rest from the bank and be exposed to the full purchase price of the home. This is a similar concept for when you trade with gearing. Gearing is a tool which allows you to pay a small amount of money (deposit) in order to gain control and be exposed to a larger sum of money. You’ll simply buy a contract of the underlying share, use borrowed money to trade with and be exposed to the full share’s value. Let’s simplify this with a more relatable life example: How gearing works with CFDs Let’s say you want to buy 1,000 shares of Jimbo’s Group Ltd at R50 per share as you believe the share price is going to go up to R60 in the next three months. You’ll need to pay the entire R50,000 to own the full value of the 1,000 shares (R50 X 1,000 shares). In three months’ time, if the share price hits R60 you’ll then be exposed to R60,000 (1,000 shares X R60 per share). Note: I’ve excluded trading costs for simplicity purposes throughout this section If you sold all your shares, you’ll be up R10,000 profit (R60,000 – R50,000). The problem is you had to pay the full R50,000 to be exposed to those 1,000 shares. When you trade a geared instrument like CFDs, you won’t ever have to worry about paying the full value of a share again. A CFD is an unlisted over-the-counter financial derivative contract between two parties to exchange the price difference of the opening and closing price of the underlying asset. Let’s break that down into an easy-to-understand definition. A CFD (Contract For Difference) is an Unlisted (You don’t trade through an exchange) Over The Counter (Via a private dealer or market maker) Financial derivative contract (Value from the underlying market) Between two parties (The buyer and seller) to Exchange the Price difference of the opening and closing price of the Underlying asset (Instrument the CFD price is based on) Let’s use an example of a company called Jimbo’s Group Ltd, who offers the function to trade CFDs. The initial margin (deposit) requirement is 10% of the share’s value. This means, you’ll pay R5.00 per CFD instead of R50, and you’ll be exposed to the full value of the share. To calculate the gearing (or leverage ratio) you’ll simply divide what you’ll be exposed to over the initial margin deposit. Here’s the gearing calculation on a per CFD basis: Gearing = (Exposure per share ÷ Initial deposit per CFD) = (R50 per share ÷ R5.00 per CFD) = 10 times gearing This means two things… #1. For every one Jimbo’s Group Ltd CFD you buy for R5.00 per CFD, you’ll be exposed to 10 times more (the full value of the share). #2. For every one cent the share rises or falls, you’ll gain or lose 10 cents. To have the exposure of the full 1,000 shares of Jimbo’s Group Ltd, you’ll simply need to buy 1,000 CFDs. This will require a deposit of R5,000 (1,000 CFDs X R5.00 per CFD). With a 10% margin deposit (R5,000), you’d have the exact same exposure as you’d have with a conventional R50,000 shares’ investment. Here is the calculation you can use to work out the exposure of the trade. Overall trade exposure = (Total initial margin X Gearing) = (R5,000 X 10 times) = R50,000 With an initial deposit of R5,000 and with a gearing of 10 times, you’ll be exposed to the full R50,000 worth of shares. In three months’ if the share price reaches R60, your new overall trade exposure will be R60,000 worth of shares (1,000 shares X R60 per share). If you sold all of your positions, you’d bank a R10,000 gain (R60,000 – R50,000). But remember, you only deposited R5,000 into your trade and not the full R50,000. This is the beauty of trading geared derivative instruments. If you want any other technical trading or fundamental term explained, please comment below. I'm happy to help. Trade well, live free Timon MATI Trader Feel free to follow my socials below.
JSE:J200Education
by Timonrosso
XRP Trade Signal (8X Lev. 500%+ Potential)We haven't given up on XRP and below I share with you our full trade signal from 24-Nov. As usual, let me warn you that leveraged trading is for experts only and carry high risk. You can liquidated and lose all funds. Make sure you know what you are doing if you engage in this type of trading. We recommend spot trading for beginners and intermediate traders only. Leveraged for experts/advanced. ----- LONG XRPUSDT Leverage: 8X Buy-in: $0.3825 - $0.4000 Targets: 1) $0.4290 2) $0.4520 3) $0.4890 4) $0.5310 Stop-loss: Close daily below $0.3750 Liq. price: $0.3552 Capital allocation: 2% --- Thank you for reading and for your continued support. Namaste.
Long
by AlanSantana
7
ADA Trade Signal (8X Lev. 400%+ Potential)I would like to share with you our trade signal for Cardano (ADAUSDT). This one we are going with 8X lev. which is high risk. For experts only. Beginners stay away. There is high risk involved with margin, leverage, futures and all that type of trading. Spot trading for beginners. Only move to the other tools once you dominate the easier ones. If you do decide to jump in without doing your research first, please keep in mind that there is a price to pay to learn. Well, there is always so much to learn... But we can do it easily from our mistakes. Here is the full trade signal from 23-Nov. It is already beyond the buy-in and some targets missing but the numbers are good and can be used. ------ LONG ADAUSDT Leverage: 8X Buy-in: $0.3025 - $0.3180 Targets: 1) $0.3455 2) $0.3800 3) $0.4040 Stop-loss: Close daily below $0.2950 Liq. price: $0.2827 Capital allocation: 2% ----- Thank you for reading. Feel free to support us with your comments. Namaste.
Long
by AlanSantana
11
Bitcoin Cash Lags Behind But Not For 10X Long (85% Possible)We are seeing how Bitcoin Cash (BCHUSDT) is lagging behind some other altcoins but we believe this won't continue to be true for long. The early/mid November shake-out has been completed and what follows is a bullish jump. Today BCH moves above EMA10 after multiple days of consolidation. The RSI is still weak but the short-term bias is pointing up. The easy target is set at 20% or $133. The next target on a higher high is $208. We are active with 10X on this one. You can find more high-risk lev. trades in the "Related Ideas" below. Thank you for reading. Namaste.
Long
by AlanSantana
3
Cardano | Bottomed Out (Very High Growth Potential)My favorite charts of all are the bottomed out ones... Cardano (ADAUSDT) is trading pretty low here, its lowest price since January 2021. We can look at this from a TA perspective as well as a trading perpective. Trading is best right now because of the low risk of this setup. A stop-loss can bet set around $0.2950, manual, which is less than 6%. While the potential targets... 44.4% is an easy one but it can go even to 68%. We are actually active on this one with lev., 8X. Let's see how it goes. Namaste.
Long
by AlanSantana
5
What Every Trader Should Know About Margin Margin can be a powerful tool to leverage your investment returns or to finance purchases apart from your portfolio. Margin is an extension of credit from a brokerage firm using your own eligible securities as collateral. Most traders typically use margin as a means to purchase additional securities, but there are other uses too. Interest is charged on the borrowed funds for the period of time that the loan is outstanding. Benefits of a Margin Trading Account: Use the cash or securities in your account as leverage to increase your buying power. Get the lowest market margin loan interest rates of any broker. Diversify trading strategies with short selling, options and futures contracts, or currency trading. Borrow against a margin account at any time and repay the loan on your own schedule. Margin borrowing is only for experienced investors with high risk tolerance. You may lose more than your initial investment. Before trading on margin, understand the following risks: Trading losses may be greater than the value of the initial investment Leveraged investments create a greater potential risk of loss Additional costs from margin interest charges Potential margin calls or liquidation of securities Hey traders, let me know what subject do you want to dive in in the next post?
OANDA:XAUUSDEducation
by TopTradingSignals
14
What is margin trading & How does it work? Margin trading is when you pay only a certain percentage, or margin, of your investment cost, while borrowing the rest of the money you need from your broker. Margin trading allows you to profit from the price fluctuations of assets that otherwise you wouldn’t be able to afford. Note that trading on margin can improve gains, but increases the risk and size of any potential losses. But what is the margin in trading? There are two types of margins traders should be aware of. The money you need to open a position is your required margin. It’s defined by the amount of leverage you are using, which is represented in a leverage ratio. There are also limits on keeping a margin trade running, which is based on your overall maintenance margin – the amount that needs to be covered by equity (overall account value). Brokers require you to cover your margin by equity to mitigate risk. If you don’t have enough money to cover potential losses, you may be put on a margin call, where brokers would ask you to top up your account or close your loss-making trades. If your trading position continues to worsen you will face a margin closeout. Hey traders, let me know what subject do you want to dive in in the next post?
OANDA:XAUUSDEducation
by TopTradingSignals
6
Bitcoin $20,000 Resistance The Downtrend ContinuesIt seems like Bitcoin wants to get back above $20,000 but it is starting to face resistance getting back above $20,000. We've been ranging from $18,200 - $20,300 for over a month now. Due to the stochastic RSI wave peaking and being at overbought levels on the daily I believe short term Bitcoin will be going back down to the low $19,000 levels within the next week or two. We've formed our daily wave and now it's starting to crest out. I put in a short above $20k looking for Bitcoin to hit around $19,500 level to close the trade. Much peace, love, health, and wealth!
COINBASE:BTCUSDShort
by peacefuljustin
were right around vwap anchored at last sell signalwhether we blow through this vwap and smash though the sss supple zone, or pull back to retest sssma and trama, it looks like the upper nadaraya watson envelope gets touched again. im waiting on another sell signal from that strategy. it seems like theres this scenario where the vix gaps up and takes off, but more measured and muted drawdown has been the norm for weeks as we grind lower. we really need to see qqq, xlf, soxl, spy to new lows if we want to long vix, and we really would like to see rotation firing on all cylinders with iwm, xlv, xle green to see a bottom story coming out of broader matkets. if we come to the top of this range and pull back i would close long.
CBOE:UVXYLong
by cerealpatterns
The Truth About LeverageIntro Trading with leverage simply means borrowing money to put on a trade. Leverage is one of the many tools available for traders who seek to generate higher gains on their capital. Brokers have strict rules that govern the use of leverage, but this article is not aimed at teaching you the complexities of borrowing from your broker. Instead, the aim herein is to teach aspiring traders when using leverage is appropriate. The Dangers of Leverage For traders who do not have excellent risk management, leverage is a highly dangerous tool that can lead to outsized losses. While brokers will only allow you to draw down a certain amount before you receive a margin call—a demand from the broker to add more capital or liquidate positions to increase free capital—such losses can still devastate most traders. Furthermore, many online influencers present unrealistic results by using extremely high amounts of leverage and then showcasing these results as easily obtainable for the average person, often without presenting the potential dangers of trying to mirror their exploits. The Complexities of Leverage The benefits of using leverage seem obvious. If you can borrow money for a trade you can potentially earn much higher percentages on your capital. If you have a $25,000 account and can borrow an additional $25,000 for a trade, you can conceivably earn twice as much profit on each trade. But let’s pump the brakes for a second. If a broker allows you to double (or more) your capital for a trade, does that mean it’s a good idea? After all, if you can double your gains, you can certainly double your losses. If a trader is using twice as much capital without thinking about how much they are risking the situation can get out of hand quickly. If a trader seeks to risk $500 on a particular trade, but they don’t properly calculate their position size based on the total leveraged capital, the trader can lose $1,000 instead of $500 with the same stop loss location. To make matters worse, the $1,000 loss is a much bigger blow to their $25,000 trading account than to a $50,000 account. The trader’s account is now $24,000, meaning they will only have access to $48,000 for their next trade. If this same process occurs a few times in a row it becomes much harder to gain back the lost capital. When To Use Leverage Trading with huge amounts of leverage, say 50x or more, and attempting to hit home run trades will almost always result in a devastating loss for new and struggling traders. For the average technical retail trader, leverage should only be used in a particular circumstance, and when done correctly, it can certainly help the trader rapidly increase their capital. When you have proper risk management and use a predefined risk on each trade, such as risking 2% of your account, leverage can play an important role. For instance, if your trading methodology places a stop loss in close proximity to your entry it’s very possible that your account capital cannot purchase enough shares to risk the desired amount. To illustrate this concept, let’s look at a basic example: Say you have a $25,000 trading account You risk 2% of your account on each trade for a dollar risk of $500 You take a trade where the stop loss is $2 below your entry (Risk per share) and the stock is $195 per share To risk the desired $500 you need to purchase 250 shares (Dollar risk / Risk per share) BUT... 250 shares would cost you $48,750, an amount that clearly exceeds your account size! This means you cannot afford to risk $500 on the trade. Without leverage you could only purchase a grand total of 128 shares. This is the only time it is appropriate to go all in on a trade—when you are able to go all in and still maintain a controlled risk parameter. Unfortunately, when you can’t afford to risk your desired amount, your entire profit taking routine is thrown out of whack. Let’s assume your profit taking regime states that you sell when you’ve gained twice your risk. Normally, you would sell the position when you are up $4 per share (twice the risk per share). Yet, because you could only afford to purchase 128 shares (not the required 250), a $4 gain per share will only produce a profit of $512—an amount that only gives you a 1:1 risk to reward ratio on this trade. In order to achieve your 2:1 risk to reward ratio you would have to gain $7.80 per share—nearly double the profit target. It’s by no means a guarantee that the trade will hit your increased profit target, and if you sell before this point you are altering your usual risk to reward scheme. Changing your profit taking regime or your risk to reward plan has a negative effect on your bottom line when looked at over a large sample size of trades. Leverage solves this problem. If you were able to use 2x leverage, you could suddenly afford the required 250 shares, and you could keep your usual profit taking routine intact. In short, leverage is a tool that allows you to maintain a consistent risk per trade even when your stop loss is so close to your entry that you cannot afford the required amount of shares. Special Considerations Keep in mind, leverage can still cause you to lose more than you are comfortable with when trading stocks. If you’re using twice the value of your account and you get caught in a gap down where price skips your stop loss location you can take an extra large loss. This is an important thing to consider, and is one reason some people only use leverage when they trade large ETFs such as QQQ, or when they trade a market that trades 23 hours per day, such as futures. These ETFs do not experience extra large gap downs because they are less volatile, and futures hardly have any gaps. Gaps on big diversified ETFs are almost always easier to recover from than a huge gap down on some other stock. For example, say you’re in a 2x leveraged position attempting to risk 2% of your account, but you get caught in a gap down on QQQ when price opens 1% below your stop loss level. In this case, you would lose 4% of your account. While this is certainly not ideal, it is completely possible to recover from this larger than expected loss. If you get caught in a 20% gap down on NFLX or a 10% gap down on TSLA while using 2x leverage your account will be devastated. For this reason, we only consider using leverage on large diversified ETFs or futures, even when we are using the methods covered in this article. In the data section below this post you can observe what a small amount of leverage (2x) can achieve. Without this small boost in capital, the gains are 69%, and while nothing to scoff at, the 2x leverage makes all the difference. These additional gains use the exact same risk parameter and we did not expose ourselves to any additional or undue risk.
NASDAQ:QQQEducation
by Level8Trading