. Now, let me say something very, very important to you. Because if I don’t say this and I don’t preface it with this, you need to understand the details and the dangers of Futures Trading. You have to understand that when it comes to trading, okay, this means that only one to twenty percent of traders make money, and eighty to ninety-nine percent of them fail.
Why Crypto Trading Is Riskier Than Traditional Trading
Now I’m just stating this because you have to understand that crypto trading is much more different and way more dangerous than traditional retail trading, okay? And I’m going to explain to you exactly why this is and how you can get started as a beginner and the pitfalls that you need to avoid. So let’s get into this. Right here, I’m on the website. You can see I’ve navigated over to KuCoin’s Futures. I like KuCoin’s features. Some people use Binance Futures, some people use BitGet. There’s many different platforms like Bybit. Any platform you can use, you can use and understand. Okay, if it doesn’t say Futures Trading, the leverage isn’t going to be as much.
Leverage Trading vs. Traditional Leverage
The reason we’re talking about leverage trading or Futures trading is because it allows you to access a lot more leverage than traditional leverage. Traditional leverage is maybe two times, but Futures leverage, which I’m about to show you in another tab, is a huge another amount of leverage. You can also see that you can trade Futures on Binance, but I’m just going to be going over KuCoin because I feel like it is a, you know, very, very simple. Now, of course, even on KuCoin, they say, you know, be careful. But anyways, that’s not the point. The point is, how do we trade Futures?
How Futures Leverage Amplifies Your Gains and Losses
So, it says right here, and I’m going to just walk you guys through the demo. It says, “What is Futures Leverage?” The Futures leverage is a magnifier. If you use 10x leverage, then your profits and your losses are going to be magnified by 10 fold. Now here’s the kicker, okay? Because some people, including beginners, only pay attention to one part of the sentence. Remember, it’s a magnifier o?
Understanding Profit and Loss with Leverage Trading
So if we click next, you can see when the price increases by 10, if you go long with 10x leverage, your profit will be 100. Now you might be thinking, what does 100 percent profit mean? Essentially, a 100 percent profit means you’ve doubled your money. So understand that this can also work for you in the inverse. If you go long 10x and the price declines 10, you have to understand that you lose your entire fund. Okay, all the money in your account, you lose it.
The Amplified Risks of Leverage Trading
Okay, so of course you can see right here it explains that leverage does bring more risks. So if the price of a coin decreases by 10 and you go long with 10x leverage, your losses will be 100. So why is this important? And I’m going to show you guys something on CoinMarketCap. Now the reason this Futures trading is so popular, okay, and the reason I want to bring this to light, is because let’s say, for example, we pick a random coin. Okay, you have to understand that let’s say, for example, I picked any of these coins, okay, and I put 10x leverage. Okay, so for example, let’s say this coin right here, in fact, let’s just say Render Token, because it’s a coin that I’ve been raving about for quite some time. Of course, 8x leverage, and then of course, let’s say we did 10x leverage.
Calculating Gains and Losses with 10x Leverage
If we did 10x leverage on this, this would have been an 80 gain, okay? So you have to understand that if you want to figure out how much leverage is going to multiply your gains or losses on a position that you would have made, just add a zero to the end of it. So this would have been 80.5 percent, and that’s something that beginners don’t understand, okay? The leverage can make you lose a lot more. Now here’s the thing that you need to understand, okay? If you’re going to start leverage trading, okay, there’s many different things that you need to do. One of the first things you need to do, guys, is you need to understand risk, okay