1. What is Leverage Trading?

Leverage trading allows traders to open positions larger than their actual capital by borrowing funds. This calculator helps determine potential profits from leveraged cryptocurrency trades.

2. How the Profit Calculation Works

The calculator uses the leverage profit formula:

Where:

• \( \text{Exit Price} \) — Price when closing the position (USD)
• \( \text{Entry Price} \) — Price when opening the position (USD)
• \( \text{Margin} \) — Your initial capital (USD)
• \( \text{Leverage} \) — Leverage ratio (e.g., 10x)
• \( \text{Fees} \) — Trading fees (USD)

Explanation: The formula calculates the price difference multiplied by your effective position size (after leverage), minus any trading fees.

3. Importance of Leverage Calculations

Details: Understanding potential profits (and losses) is crucial in leveraged trading as both gains and losses are magnified by the leverage factor.

4. Using the Calculator

Tips: Enter all values in USD. Leverage must be at least 1x. Fees are optional but recommended for accurate calculations.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between isolated and cross margin?
A: Isolated margin limits risk to the specific position, while cross margin uses your entire balance as collateral.

Q2: How does leverage affect liquidation price?
A: Higher leverage means liquidation occurs at smaller price movements against your position.

Q3: What are typical leverage ratios in crypto?
A: Exchanges commonly offer 2x-100x leverage, with 5x-20x being most common for retail traders.

Q4: Are there risks not shown by this calculator?
A: Yes - slippage, funding rates (for perpetual contracts), and sudden market movements can affect actual results.

Q5: Should beginners use high leverage?
A: No - beginners should start with low (2x-5x) leverage to understand the risks before increasing exposure.