02-25-2021, 06:06 AM
To new people, if you see a 2x, 3x etc or buying power written anywhere on the webpa
<!-- SC_OFF --><div class="md"><p>A lot of new people might not know this. Case and point, <a href="https://np.reddit.com/r/Bitcoin/comments/lr9fwe/this_is_all_i_have_im_scared_to_lose_everything_i/?utm_medium=android_app&utm_source=share">this post</a> on bitcoin sub</p> <p>This guy went all in with all the money he had, he thought he was just buying btc with his money, he didn't realize it was a margin account with 3x leverage, he didn't even know what margin is. His position got closed out once and he opened another position, still not knowing that he was playing with borrowed money. </p> <p>To put in short and simple terms, what margin is:</p> <p>Margin is literally borrowed money. Let's say you put 1000$ in and it's a margin account with 3x leverage. That means your broker lends you 2000$ and your buying power is 3000$. </p> <p>You buy btc with 3k, btc dips 33.3%, so your 3k has gone down to 2k, the exchange/broker pulls out the 2k by closing your position and you're left with nothing. </p> <p>If you had bought 1k worth of btc without margin, for you to go to nothing, btc has to go down to nothing aka, go down 100%. </p> <p>The higher the leverage (2x, 3x, 10x), the smaller the % dip required to wipe you out. </p> <p>So if you see, words like <strong>buying power, margin, leverage or 2x, 3x, etc</strong> where you're buying, you've accidentally opened up a margin account, and its not a simple buy, you're opening up a long position with borrowed money.</p> <p>Edit: On binance, currency pairs might have little 5x, 10x, etc written next to them which just simply denotes the max leverage available with those pairs. If you're on binance, as long as the top part of page says spot and the buy sell buttons aren't replaced with buy/long & sell/short buttons you're fine. Binance does require you to pass a small quiz to do leverage trading if you accidentally stumble onto the margin page. Many less popular exchanges don't have this tiny barrier. Many exchanges are completely for margin trading and there's no spot option.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/damittydam"> /u/damittydam </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/lramp2/to_new_people_if_you_see_a_2x_3x_etc_or_buying/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/lramp2/to_new_people_if_you_see_a_2x_3x_etc_or_buying/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>A lot of new people might not know this. Case and point, <a href="https://np.reddit.com/r/Bitcoin/comments/lr9fwe/this_is_all_i_have_im_scared_to_lose_everything_i/?utm_medium=android_app&utm_source=share">this post</a> on bitcoin sub</p> <p>This guy went all in with all the money he had, he thought he was just buying btc with his money, he didn't realize it was a margin account with 3x leverage, he didn't even know what margin is. His position got closed out once and he opened another position, still not knowing that he was playing with borrowed money. </p> <p>To put in short and simple terms, what margin is:</p> <p>Margin is literally borrowed money. Let's say you put 1000$ in and it's a margin account with 3x leverage. That means your broker lends you 2000$ and your buying power is 3000$. </p> <p>You buy btc with 3k, btc dips 33.3%, so your 3k has gone down to 2k, the exchange/broker pulls out the 2k by closing your position and you're left with nothing. </p> <p>If you had bought 1k worth of btc without margin, for you to go to nothing, btc has to go down to nothing aka, go down 100%. </p> <p>The higher the leverage (2x, 3x, 10x), the smaller the % dip required to wipe you out. </p> <p>So if you see, words like <strong>buying power, margin, leverage or 2x, 3x, etc</strong> where you're buying, you've accidentally opened up a margin account, and its not a simple buy, you're opening up a long position with borrowed money.</p> <p>Edit: On binance, currency pairs might have little 5x, 10x, etc written next to them which just simply denotes the max leverage available with those pairs. If you're on binance, as long as the top part of page says spot and the buy sell buttons aren't replaced with buy/long & sell/short buttons you're fine. Binance does require you to pass a small quiz to do leverage trading if you accidentally stumble onto the margin page. Many less popular exchanges don't have this tiny barrier. Many exchanges are completely for margin trading and there's no spot option.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/damittydam"> /u/damittydam </a> <br/> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/lramp2/to_new_people_if_you_see_a_2x_3x_etc_or_buying/">[link]</a></span> <span><a href="https://www.reddit.com/r/CryptoCurrency/comments/lramp2/to_new_people_if_you_see_a_2x_3x_etc_or_buying/">[comments]</a></span>Kind Regards R