Leverage With Derivatives Trading Using 5 Min Chart ]-Steemit Crypto Academy | S6W1 | Homework Post for @reddileep

Leverage trading is a term for trading on leverage. You do not need to deal with any kind of risk to trade on leverage, therefore leverage can be used to achieve quick results. Leverage trading could serve as a method to either increase or decrease the amount of assets you have. Leverage trading can be done on several platforms and on trading platforms like:

1. Finance Brokers

2. Cloud brokers

3. Online brokers

4. Equity and FX brokers

Calculations of leverage

Leverage can be calculated on the trading platform in which you are using, through the pricing. When trading with leverage, you are able to choose which amount you want to use on each trade.

In simple terms, the more you use, the better the profit you can make. One can easily determine the amount of leverage they want to use to trade on any trade. This can be done by creating several key financial trades that can be used to gain trading capital.

Leverage will usually last for a certain number of minutes and will depend on how many quotes you are getting on the trade. Also, how well the trade does, can influence the leverage. With the leverage calculated and allocated, the trader can start the trade. For retail traders, this could lead to a big profit.

A the trader increases the risk (futures and derivatives trade more leverage than spot) by taking on more leverage in the future. This process is generally done through buying a contract for say $1,000 with an initial leverage of 100. The trader wants to increase this to 10,000, so he pays $1,000 for a new $1,000 contract, so the leverage is now 10,000/1,000.

Then the trader will buy another $1,000 contract and leverage it to 10,000/1,000, meaning the trader now has $10,000 of credit risk.

The trader now wants to buy another $1,000 contract (leverage 10,000/10,000) so he must pay an extra $1,000 to buy the contract. So the leverage is now 20,000/(1,000+1,000+1,000+1,000) = 28,000. The trader must sell $2,000 of his contract if he wants to have the leverage below 20,000, so the trader must pay $2,000 (28,000/(1,000+1,000+1,000+1,000)) to be able to sell a new contract with leverage of 20,000.

The trader has an advantage because now he has $28,000 of credit risk at risk in the futures market. This does not mean the futures market will crash, but the trader does risk capital, even though they can find other places to invest the $28,000.

This process of borrowing at short notice and lending at long notice is extremely profitable for the trader. Using a derivative (futures) such as an oil futures contract with a current value of $70 should not bring a great profit if one is able to borrow $70 for a short time and lend $70 for a long period, but this is a possibility with leverage trading.

The position size can increase, and the profit also increases when the trader is willing to borrow money to fund short positions. So if the trader wants to use a stock to make a trade, a position can be made in the stock using less leverage than would be needed to fund a position in oil using a futures contract.

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Benefits of Leverage Trading cannot be under estimated. The benefits of leverage trading includes;

1. The leverage trades reduce the risk of wrong trades but, like all trading and investment, there is a risk involved with the strategy. The trader looks for opportunities in this market by increasing the positions, sell high, and buying low.

2. "It can easily provide a huge return if things go right; therefore, it becomes essential to control the risks involved in the process".

3. Leverage trading helps to achieve a financial goal; if there is a specific goal that can be attained in the long term, taking out a loan is the ideal way of achieving that goal.

4. It is an increasingly popular form of arbitrage and profits may be accumulated quickly, if left to run.

5. Leverage trading allows you to leverage your position in your asset, increasing the value of your position as your stocks rise, which can create large gains if managed properly.

6. Your exchanger will require a deposit amount to open a credit account, essentially giving you more money to trade with. In general, we tend to think of higher amounts of leverage as being good and more dangerous.

7. How much profit you make depends upon the leverage factor of the trades you are entering.

8. You can use quick strategy to reduce your risk and triple your profit in one day.

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1. It is a high risk trading system as traders cannot stop any trades before the contract expires. As you can not stop all the trades, there will be a significant exposure to open, close and stop losses.

1. The trading period will be more than for traditional trading system.

2. There are no minimums in leverage trading.

3. There is no regular salary for traders in leverage trading.

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Relative Strength Index - RSI:

Relative Strength Index - RSI : Is a momentum indicator that measures the speed and change of price movements in the market.
The RSI is used to make a buy or sell decision. The larger the number, the greater the momentum in the market.

The Power Index calculates the 16th price close by using the average of all 12 . As the ratio increases, it is a signal that investors are more bullish and this market may be moving higher in time.

Volume

Volume is the number of shares traded per unit time. Volume can be used to determine market movement and momentum.
Volumes can be used to set limit orders in the market to be bought or sold at a given price.

Using a Swing Trading Strategy Once you have decided on which strategy you will be going with you can begin to look at how to trade this strategy. In order to begin with, we need a set of requirements that traders must meet in order to determine how to trade. One such requirement is that you must have a decent amount of cash available.

You may ask, how do I limit the risk? Locking in profits, and reducing the long-term exposure, by purchasing Puts and Calls at the Right time, at the Right price can be extremely beneficial.

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Practice using Binance Exchange

1)To get into leverage on binance, go to your spot trading page and select margin trade.

1. If that is your first time of getting to the interface, you will be given a brief tutorial and a test to know if you carefully understand what you are going in for.

The above the use of my indicators which is RSI and Volume trade.
The RSI is the yellow while the Volume is below it.
The strategy is very simple and easy to enter a trade.

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Sell signal

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1. If the RSI is reading 70 - 80, know it has entered over bought line and there is a high probability for the market to start selling.
2. The volume should show a high percentage of the red coloured shape.
3. The EMA has to cross

Buy signal

1. Thehe RSI is reading below 30 know it has entered over sold and there is a high probability for the market to start buying
2. The volume should show a high percentage of the green coloured shape.
3. The EMA has to cross

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Examples trade is below

Conclusion:

If you have a decent amount of capital and are able to borrow more to create a position in a futures market, then this could be a profitable method of trading, but be careful that you can afford to pay back the money borrowed. If you have a large amount of short positions, you may be put at risk because of a large event in the market, which might make the futures market crash. If your position in the futures market is based on any part of the market, you can lose all of the money you have.

If you think you are making a profit in a rising market, be very careful.

Never forget that the secret to successful trading is:

– The right strategy

– Lots of time

– Money

We were never meant to "get rich" overnight. It takes a long time to learn the techniques that help you make smart trades and consistently make profit. The important thing is to focus on making good trades, and you'll make plenty of money in the long run.

@reddileep