You can also be Archimedes of futures trading!

The ancient philosopher Archimedes said he would raise the earth if he had leverage. Leverage is a magic wand that allows you to exert ignorant power with a small amount of power. What happens if you wield this magic wand to the cryptocurrency futures market? Can we lift the earth with less force too?

As we live, we learn a rule. That is, to get something with a value of 1, we must pay the price with a value of 1 as well. This rule also applies to spot trading. In order to buy one grapefruit, you have to pay the equivalent of the value. But thanks to leverage in futures trading, we are free from that rule. Applying leverage on futures trading will allow you to trade a value of 50 with only a value of 1. How is this possible? It is by using the help of others, just as Archimedes was able to do a great job with the help of leverage.

The original leverage concept is to maximize one’s interest by borrowing the capital of others. Suppose you bought 100 grapefruits in a 100 GFJ(GrapeFruit Juice) coin. With your outstanding business skills, you have sold all grapefruits at a price of 2 GFJ each and have gained total 200 GFJ. Your initial investment is 100 GFJ, so the net profit from selling grapefruits will be another 100 GFJ, with 100% of net profit ratio. This is great enough, but what if you use leverage to achieve the same result?

Let’s take 10x leverage and buy 100 grapefruits at 100 GFJ. ‘10x leverage’ means that you invest only 10% of your total investment(10 GFJ here) in your capital and the remaining 90%(90 GFJ) is borrowed using the capital of others. After you sell all grapefruits at 200 GFJ and give back 90 GFJ to the borrower, you will get a net profit of 100 GFJ with net profit ratio of 1000%! Maximizing the net profit you can gain while minimizing the amount of investment you actually execute is the great advantage of leverage.

Moreover, the concept of leverage in futures trading has changed by simplifying the cumbersome process of borrowing capital from others. Leverage in futures trading means the ratio of actual investment to total investment. This way of using leverage without the capital of others has made futures trading more attractive.

However, leverage is high risk high return, and there is also the possibility of gaining as much loss as getting a big profit. In the following posts we will discuss the possible loss by leverage investment and how to avoid risk.

Are you ready to lift the earth like Archimedes? Start trading Bitcoin futures with up to 50x leverage on Nexybit here!