ACADEMY
  • /
  • LEVERAGE TRADING
Leverage Trading

Steps to begin trading leverage in the crypto markets

Analyze and pick a suitable platform

To begin trading with leverage in the crypto market, an exchange signup process is needed. One of the biggest derivatives exchanges on the market is Bybit. With billions in trading volume on the daily and little to no downtime, it is considered one of the best exchanges. The signup process is simple and depending on the trader’s location, a KYC process may be needed.

Practice small and get used to the interface (ByBit full interface)

The above is the full user interface, all leverage trading nuances are visible on the right-hand side. Any open positions will be displayed on the bottom with live Unrealised PnL’s. It is important to monitor this area as it highlights key conditions of the trade such as set take profit levels and stop losses. Overall, this user interface is quite easy to understand, it requires some practise before getting used to it.

The interface also has a price action chart which will visually show entry and exit levels once a trade goes live. On the right-hand side, an order book shows the depth of the market and the pending orders. A trader’s limit order and or a conditional limit order will rest in the book until they are filled. Furthermore, a recent trades section lays below the orderbook. This section shows the immediate executed order’s in the market. They will be removed automatically from the orderbook once this occurs.

Bybit also has a tab running across the top of the exchange’s interface. This area lists all the important information in relation to the asset such as the 24Hr high and the 24Hr low. The funding rate and countdown is also presented. This peace of data is crucial as it highlight if longs are getting paid or short are getting paid. Simply put when the funding rate is positive, long positions pay short positions. When the funding rate is negative, that is when short position pays long positions. It is designed the tether the perpetual contract price to the current mark price.

Other key concepts to understand about the funding rate is that they are paid solely between traders and not collected by the exchange. They are only found in perpetual contracts because of that fact that there is no real expiration date. Therefore, the rate can vary depending on the current market conditions.

Execution of trade plan

Novice traders who plan to partake in leverage trading should make sure they have a proven trading strategy. This can be a strategy that meets the criterions for scalping, day trading and or swing trading. Proper execution of strategies is highly important as this will avoid unnecessary emotional swing. Professional traders who have mastered leverage trading will always trade with a plan. They do not execute on a random basis; they have well thought-out plans with clear take profit and loss levels