1. What is Leverage Trading?

Leverage trading allows you to trade larger positions than your actual capital by borrowing funds. It amplifies both potential profits and losses. This calculator helps determine your net profit after considering all factors.

2. How Profit is Calculated

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 Calculation

Details: Accurate profit calculation is crucial for risk management in leveraged trading. It helps traders understand potential outcomes before entering a position.

4. Using the Calculator

Tips: Enter all values in USD except leverage which is a ratio. Ensure entry price is greater than 0 and leverage is at least 1x.

5. Frequently Asked Questions (FAQ)

Q1: How does leverage affect my profit?
A: Leverage multiplies both potential profits and losses. Higher leverage means greater risk and reward.

Q2: What if my exit price is lower than entry price?
A: The calculator will show a negative value, indicating a loss on the trade.

Q3: Are fees always necessary to include?
A: While optional, including fees gives a more accurate net profit calculation.

Q4: Can I use this for short positions?
A: Yes, for short positions your exit price would be lower than entry price.

Q5: Does this account for liquidation price?
A: No, this only calculates profit. Liquidation depends on exchange rules and position size.