If you haven’t read our ‘What are futures?” article you can do so HERE. It might make a little more sense to understand what futures are and the brief history of them.
So I know why you are really here… the ‘L’ word… leverage.
How many times do I get asked a month if I use leverage? A LOT.
I am completely torn on the matter. I believe the high leverage, which I categorise as above 10x, is designed to line exchanges pockets.
Lower leverage on the other hand, if used correctly and responsibly, can be a very very profitable tool.
Leverage allows you to execute a trade multiple times higher than the amount you enter the trade with.
If you were degenerate and went 100x, you in effect would need 100x less to perform the same trade.
If LINK is trading at $30.00 and you want to trade with 10x leverage you would effectively need to enter the trade with $3.
So if you wanted to trade spot (no leverage), if you trade $3 and it pops 10% great you made $0.30. Using leverage you would make $3.00, or 10x more… You get it?
If we have a look at AAX and its futures training section. Further down it makes more sense.
After you have signed up using THIS LINK, head to AAX.com
Head to futures
A tip would be in a bull market, you would effectively want to settle the trades in BTC as it makes sense to get the gains in BTC as it is also increasing.
In a bear market, it is more beneficial (in my opinion) to settle in USDT as it is stable. But, what do I know, do what you want…
Select the leverage you are willing to dance with. In this example on the LINK USDT chart, you can get up to 25x leverage….
Now you can place a limit or a market order. Remember, the limit is you deciding to buy at a certain price and ‘market’ is buying at the current market price.
Here you can set the price you are willing to go long on (buy in price) and how many contracts you are looking to buy.
In the example below, we have selected 10x leverage.
So, with 10x leverage at an entry price of 30.00 UST (this is just an example I know it is below), 1 contract will cost you 2.996USDT. so you are getting an entry at 10x less than the regular price.
So why does everyone say it is risky, it sounds great to me?
Well, the other ‘L’ word… liquidation.
Liquidation happens when your initial capital is completely taken away as the trade has gone so far the other way from your entry point.
So what are the liquidation points? Well, these are decided for by the exchanges based on the maintenance margin calculation that can be found in more detail HERE.
Liquidation calculator can be found here –
I can’t be bothered to go through all the formulas so an easy way to understand it is –
Effectively if you enter a long position, your liquidation point will be below your entry point and if the price hits this point, your funds will be taken away and you will receive the liquidation email of doom.
The same goes for a short, although it will be above your entry point.
The higher the leverage, guess what, the closer that liquidation price will be to your entry average entry price. It only takes a tiny movement in the crypto markets to set the liquidation engines running and scooping everyone’s crypto up.
Luckily AAX has a liquidation point calculator which lets you plug your numbers in and it spits out your REKT point.
If you use 10x as an example you can see at $30.00 entry, $27.298 is our liquidation point.
Now let’s crank it up and see the effect.
A lot closer to your entry…
Once you are comfortable with your entry point and your liquidation point you will want to set your all-important stop loss.
This is a price below your entry point but above your liquidation point, or vice versa with a short (we don’t like bears here).
This stops you out of your position so you don’t lose all your initial collateral. This is not financial advice it is just common sense. Just use a stop loss and don’t be a degenerate.
Using this article and the previous “What are futures” should now give you the confidence to give it a go. Start small, learn the game with tiny amounts you are happy to lose (because you will).
Even better, when you sign up to AAX using our referral link you will receive a 110 USDT bonus available for futures trading!
We couldn’t recommend AAX enough for getting you started in the world of the futures.
Stepwise video on how to claim that is below –
How to sign up to AAX -Scan the QR code to get started.
AAX has a wide selection of the most popular cryptocurrencies on the market including its own native platform currency AAB.
Not only that AAX is one of the most reliable exchanges out there and proudly keeps the lights on when other big exchanges often halt withdrawals and deposits during busy times.
I always recommend to our clients that you have AAX even if it is just for busy times. But, I will warn you… you will stay.
Why wouldn’t you? The user interface is the most user friendly out there and to top it all off… they are powered by the London Stock Exchange Groups Technology’s Millennium Exchange, bringing scalable, trustworthy powerful exchanges to the cryptocurrency markets.
If you are yet to sign up to AAX, we have a great working partnership with them and you can sign up to receive discounted trading fees using this link or by using the QR code below.
We have a Patreon page which is the price of a pint per month. It lets you know what we are buying and selling and when. It also has full access to my portfolio. You won’t get this access anywhere else.
We also have a live Early Retirement Index on there. A list of coins we believe will perform excellently over the next few years.
You can join HERE
We hope this helps and has been useful. If you have any questions just get in touch and we will be more than happy to help. Please remember to sign up using the referral links to help support our platform.
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