Trade Bitcoin Trading

How Leverage Increases BTC USD Trade Profits & Losses?

If you hold a $10,000 trading account utilizing 5:1 leverage, you are permitted to purchase a maximum of 10 lots of BTCUSD, equivalent to $50,000, assuming the current Bitcoin price is $5,000 per standard contract (1 Bitcoin).

Calculate profits and losses with three leverage examples on a $10,000 BTCUSD account.

  • 10 lots (5:1)
  • 4 lots (2:1)

Note: This reflects the leverage currently in use, not the maximum leverage potential. If a Bitcoin broker extends 5:1 leverage, but you only execute trades totaling 4 lots, the leverage factor you are actively applying is 2:1. However, if you trade 10 contracts, the utilized leverage becomes 5:1, equivalent to the Maximum leverage (5:1).

So, the example shown below talks about how much leverage is used based on the amount of the trade that you have started or 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 equate to $1 dollar

If the price of Bitcoin move by $100:

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

One Lot, 100,000 points equals 100 dollars

10 Lots at 100,000 Points Equals $100 Times 10, or $1,000

$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 equate to $1 dollar

If the price of BTCUSD Crypto move by $100:

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

One Lot, 100,000 points equals 100 dollars

10 Lots at 100,000 Points Equals $100 Times 10, or $1,000

$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)

A 500,000-point profit equals $500 in dollar terms.

For 1 lot, 1,000 points equate to $1 dollar

If the price of BTCUSD CryptoCurrency move by $500:

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

One Lot, 500,000 points equals 500 dollars

10 Lots at 500,000 Points Equals $500 Times 10, or $5,000

$500 move

Total = balance + profit

= 10,000 + 5,000

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

If you lose 500,000 points, the dollar loss is $500.

For 1 lot, 1,000 points equate to $1 dollar

When the price of Bitcoin Crypto changes by $500:

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

One Lot, 500,000 points equals 500 dollars

10 Lots at 500,000 Points Equals $500 Times 10, or $5,000

$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 your earnings amount to 100,000 points, equating to $100 USD, the dollar value of the profit is calculated as:

For 1 lot, 1,000 points is $1

If the price of Bitcoin Crypto move by $100:

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

100,000 points = $100 dollars, 1 lot of

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 is $1

If the price of BTCUSD CryptoCurrency move by $100:

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

100,000 points = $100 dollars, 1 lot of

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 Currency price moves $500 (500,000 points)

A 500,000-point profit equals $500 in dollar terms.

For 1 lot, 1,000 points equate to $1 dollar

When the price of Bitcoin Crypto changes by $500:

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

One Lot, 500,000 points equals 500 dollars

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 lose 500,000 points, the dollar loss is $500.

For 1 lot, 1,000 points equate to $1 dollar

If the price of BTCUSD Crypto move by $500:

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

One Lot, 500,000 points equals 500 dollars 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 example above, it's clear that using more leverage means bigger profits or losses, while using less leverage means smaller profits or losses.

It is therefore advisable to utilize lower leverage to reduce the risks associated with online trading of Bitcoin Cryptocurrency. The greater the leverage employed, the higher the risks involved. This principle is one of the money management rules, advising against trading with leverage exceeding 5:1 at any 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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