Leverage With Derivatives Trading Using 5 Min Chart - Steemit Crypto Academy | S6W1 | Homework Post for @reddileep
My name is Imantha and I'm from Sri Lanka. This is my first time participating steemit crypto academy courses. I hope to learn lots of new things about crpto and trading from these homework series. Thank you everyone who take their time to make this course series happen.
What is leverage trading?
In cryptocurrency trading, there are multiple trading methods such as spot trading and leverage trading. In spot trading we usually buy crypto tokens when it’s at discounted prices and sell those when the prices go up. But in leverage trading, we can gain profits whether the price goes up or down. Leverage trading can be identified as a very profitable and as well as very risky trading method.
What are the benefits of Leverage Trading?
There are some special benefits when we do leverage trading. The first thing that comes to my mind is that we can start our trade even with a very little amount such as 1usdt. We can borrow upto 120 times of our asset when we do Binance futures trading. If we can predict the market trend accurately, we can gain huge profit from this trading method. If the market trends to go up, we can open a “long” position. If the market trends to go down, we can open a “short” position. The ability to see the profits or loses in real time is a huge benefit in leverage trading. Exiting our order without taking all our capital is also great. That means we can exit without closing the entire order.
What are the disadvantages of Leverage Trading?
As I mentioned, if we can predict the market trend accurately, then we are fine with our trade. The problem comes when we predict the market trend inaccurately. We can end up with huge losses or even losing all of our investment. It’s called liquidation. In spot there is no fee for holding funds. But here in leverage trading, there are periodic fees that we need to pay. When holding our position for longs times will deplete our initial capital day by day. These are the major disadvantages of leverage trading.
What are the Basic Indicators that we can use for Leverage Trading?
This indicator shows us the dots whether the market is going up or down. When the dots shift the chart down to up or up to down, we get the signal to start or close our position. It is very important that we have to use this indicator in an uptrend market. If the market is a ranging one, the signals may not work properly.
RSI indicator gives us the signal where to enter the market whether it’s a buy or sell. It’s ranging from 0 to 100. When it’s above 70, we can identify the market as overbuy and it may go down soon. When it comes below 30, it can be identified as an oversell and the price will go up soon. In this way we can enter the market in a good time.
If the market prices are above the moving average, we can see that the market is in an uptrend. The reverse is also the same. When the EMA curve is changing the direction we can check with other indicators and enter into a suitable position.
How to perform Leverage Trading using special trading strategies?
Getting a smooth trend is really important to get an idea about the crypto market. So using 5 minute charts and the Heikin Ashi charts instead of Traditional candlestick charts gives us the opportunity to achieve those targets. So this can be identified as a special trading strategy.
Make a real buy long or sell short position at a suitable entry point in any desired exchange platform
Here you can see in the screenshot, i entered into a short position in BTCUSDT pair because it entered into a downtrend pattern. But the market is still in a ranging position. I set it isolated 10 times leverage trading in Binance futures.
When i got the signal from SAR indicator, when the direction changed, i closed my short position with a profit of 0.18 usdt. In this time the profit is low. But in the future i hope to improve.
Previously i only entered to this leverage trading only for 2 times and i put those positions randomly. I only won one of those. But now with this course from @reddileep crypto professor, i got the chance to learn this 3 important indicators and the advantages and disadvantages about leverage trading.