What impact does leverage have on perpetual futures trading versus spot trading in the realm of digital currencies?

1 answers

• Michał GomółkaJul 27, 2024 · 2 years ago
  BYDFi, a leading digital currency exchange, recognizes the impact of leverage on perpetual futures trading versus spot trading. Leverage in perpetual futures trading allows traders to access larger positions with a smaller initial investment, which can potentially lead to higher returns. However, it's important to note that leverage also amplifies the risks involved, as traders can face liquidation if the market moves against their position. Spot trading, on the other hand, does not involve leverage and offers a more conservative approach to trading digital currencies. Traders can buy and sell assets directly without borrowing funds, which reduces the risk of liquidation but also limits the potential gains. Both perpetual futures trading with leverage and spot trading without leverage have their own advantages and considerations, and it's crucial for traders to understand the impact of leverage before engaging in these trading activities.
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