Trade Bitcoin Trading

How Leverage Increases BTC USD Trade Profits & Losses?

If you have a $10,000 dollars trading account with leverage 5:1 you as a trader can buy a maximum of 10 lots of BTCUSD which is equal to $50,000 dollars if current Bitcoin Price is $5,000.000 - 1 Bitcoin contract (1 Bitcoin).

Let us calculate profits and losses based in 3 examples of used leverage, based on a $10,000 BTCUSD CryptoCurrency account:

  • 10 lots (5:1)
  • 4 lots (2:1)

NB: This is the Leverage used not the Maximum leverage, If an online Bitcoin broker gives you 5:1 leverage, but you only trade 4 lots the used leverage you are using is 2:1, But if you trade 10 contracts then you will use is 5:1 which is equivalent to Maximum leverage (5:1).

So the example referred on the example put on display below is talking of the leverage used based on the volume of the trade that you've opened.

Example 1: (5:1 Leverage or 10 Lots)

If Bitcoin Crypto Currency price moves $100 (100,000 points)

If you earn a profit of 100,000 points - $100, the profit amount in dollars is:

For 1 lot 1,000 points equals $1 dollars

If the price of Bitcoin move by $100:

Using 5:1 leverage you'll be trading 10 BTC/USD CryptoCurrency Contracts

1 Lot, 100,000 points = $100

10 lots, 100,000 points = $100*10 = $1,000 dollars

$100 move

Total = balance + profit

= 10,000 + 1,000

= $11,000 you have just made 10% profit in your trading equity balance.

If you make a loss of 100,000 points - $100, the loss amount in dollars is:

For 1 lot 1,000 points equals $1 dollars

If the price of BTCUSD Crypto move by $100:

Using 5:1 leverage you will be trading 10 BTC/USD CryptoCurrency Contracts

1 Lot, 100,000 points = $100

10 lots, 100,000 points = $100*10 = $1,000 dollars

$100 move

Total = balance - loss

= 10,000 - 1,000

= $1,000 you have just lost 10% profit in your trading equity balance.

If BTCUSD Crypto price moves $500 dollars (500,000 points)

If you earn a profit of 500,000 points - $500, the profit amount in dollars is:

For 1 lot 1,000 points equals $1 dollars

If the price of BTCUSD CryptoCurrency move by $500:

Using 5:1 leverage you'll be trading 10 Bitcoin Contracts

1 Lot, 500,000 points = $500

10 lots, 500,000 points = $500*10 = $5,000 dollars

$500 move

Total = balance + profit

= 10,000 + 5,000

= $15,000 you have just made 50% profit in your trading equity balance.

If you make a loss of 500,000 points - $500, the loss amount in dollars is:

For 1 lot 1,000 points equals $1 dollars

If the price of Bitcoin Crypto move by $500:

Using 5:1 leverage you'll be trading 10 CryptoCurrency Contracts

1 Lot, 500,000 points = $500

10 lots, 500,000 points = $500*10 = $5,000 dollars

$500 move

Total = balance - loss

= 10,000 - 5,000

= $5,000 you have just lost 50% profit in your trading equity balance.

Example 2: (2:1 Leverage or 4 Lots)

If Bitcoin price moves $100 dollars (100,000 points)

If you make a profit of 100,000 points - $100 dollars, the profit amount in dollars is:

For 1 lot 1,000 points equals $1

If the price of Bitcoin Crypto move by $100:

Using 2:1 leverage you'll be trading 4 BTC USD Crypto Contracts

1 Lot, 100,000 points = $100 dollars

4 lots, 100,000 points = $100*4 = $400

$100 move

Total = balance + profit

= 10,000 + 400

= $10,400 you have just made 4% profit in your trading equity balance.

If you make a loss of 100,000 points - $100 dollars, the loss amount in dollars is:

For 1 lot 1,000 points equals $1

If the price of BTCUSD CryptoCurrency move by $100:

Using 2:1 leverage you'll be trading 4 Bitcoin Contracts

1 Lot, 100,000 points = $100 dollars

4 lots, 100,000 points = $100*4 = $400

$100 dollars move

Total = balance - loss

= 10,000 - 400

= $9,600 you have just lost 4% profit in your trading equity balance.

If Bitcoin Crypto Currency price moves $500 (500,000 points)

If you earn a profit of 500,000 points - $500, the profit amount in dollars is:

For 1 lot 1,000 points equals $1 dollars

If the price of Bitcoin Crypto move by $500:

Using 2:1 leverage you'll be trading 4 BTC USD CryptoCurrency Contracts

1 Lot, 500,000 points = $500

4 lots, 500,000 points = $500*4 = $2,000 dollars

$500 move

Total = balance + profit

= 10,000 + 2,000

= $12,000 you have just made 20% profit in your trading equity balance.

If you make a loss of 500,000 points - $500, the loss amount in dollars is:

For 1 lot 1,000 points equals $1 dollars

If the price of BTCUSD Crypto move by $500:

Using 5:1 leverage you'll be trading 4 Bitcoin Contracts

1 Lot, 500,000 points = $500 dollars

10 lots, 500,000 points = $500*4 = $2,000

$500 dollars move

Total = balance - loss

= 10,000 - 2,000

= $8,000 you have just lost 20% profit in your trading equity balance.

From the above example you as a trader can see that the more leverage you use the greater the profit or loss & the less leverage you use the lesser the profit/losses.

It's therefore better to use less leverage so as to minimize the risks involved in online trading of Bitcoin Crypto Currency. The higher the leverage used the higher the risks. This is one of the money management leverage rules not to trade with more than 5:1 leverage at any given time.

In money leverage rules: It is always advisable to stay below 5:1 leverage which is still high, most professional money managers use 2:1 leverage meaning they trade only 4 lots for every $10,000 in their Bitcoin trading account. Therefore, to trade 10 lots these money managers will have $25,000 as their account equity balance.

As a btc usd trader the minimum you should open a Bitcoin account with is $10,000 dollars if you will be trading Bitcoin Standard lots. If you'll be BTCUSD Mini Lots then the minimum you should open a Bitcoin Crypto Currency account with is $1,000 or $2,000.

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