In crypto currency trading leverage refers to the borrowed assets that the crypto trading exchanges gave to thier traders for trading of crypto currency.
Basically when a trader want to do a trade in future trading then the crypto exchange gave him the crypto currency coins in the form borrowed assets which a trader can use to maximize his balance for trading.
Different crypto exchange provides different percentage of leverage amount and the traders can select the leverage by it own in the trading.
If we have a 10$ in our wallet and we want to invest in the Ethereum coin then the crypto exchange on which we are doing trading provide us leverage and if we use the leverage 10x the mean is the that it's multiple to our balance.
It will boost our balance 10x and we can trading with high balance.Another important thing is that of we uses high leverage then their is a high chances of risk.
How Does It Work?
The work of leverage is simple and it's that if we want to use leverage in crypto trading then firstly we have to deposited some balance in our account and then the work of leverage will start in the trading.
After depositing into the wallet for trading and we want to invest 1000$ in any crypto coin then we must have to own 10$ in our wallet for the 10x leverage and as i mentioned before it will boost our balance 10x and we can trade with 1000$ with borrowed assets.
The next purpose of it's work is that we must have to maintain our liquid balance of our wallet and in that case we did trade with leverage and it's goes against our trade in this case we can't able to maintain balance and also we loose our assets according to our leverage and our balance.
For avoiding leverage we must have to deposited more balance according to our trade amount and that's called collateral in crypto currency.We must have to follows these things for using leverage in crypto trading.
The first reason to use leverage in crypto trading is that i mentioned earlier it boost our balance and which can help us to do more trade for gaining profit.
The second reason to use the leverage in crypto trading is that we can maintain our collateral with the leverage and the collateral that we can main with high balance, we can maintain it with some leverage.
Another major reason is that it shows high balance according to our deposited balance and that's it's benefits and if the market is according to trade it's gives us high profit.
Another reason of leverage in crypto trading is that it's double edge for the traders and the first edge is that it can boost the balance and second edge is that if the market is well balanced according to our trading then it will give us high profit