How is Bitcoin leverage profit and loss calculated?

Profit and loss calculation for Bitcoin leveraged trading: Profit: Profit amount = (Leverage ratio x deposit amount) x (Ending price - Entry price) Loss: Loss amount = (Leverage ratio x Deposit amount) x (Entry price - Ending price)

Bitcoin leverage profit and loss calculation

Introduction to leverage trading

Leveraged trading is a technique that uses borrowed funds to increase the size of a trade. In Bitcoin trading, traders can use leverage to magnify their positions, meaning they can hold more Bitcoin than the funds available in their account.

Leverage profit and loss calculation

The profit and loss calculation of leveraged trading is different from conventional trading. The following is the calculation method:

profit

• profit amount = (leverage x deposit amount) x (end price - entry price)

Loss

• Loss amount = (Leverage x Deposit amount) x (Entry price - Ending price)

Example:

Assume the trader uses 5x leverage, deposits $100, and the Bitcoin entry price is $20,000.

• Ending price is $22,000:

  • Profit amount = (5 x $100) x ($22,000 - $20,000) = $1,000

• Ending price is $19,000:

  • Loss amount = (5 x $100) x ( USD 20,000 - USD 19,000) = USD 500

Risk Warning

Leveraged trading amplifies profits while also amplifying risks. Losses may exceed a trader's deposit amount. It is therefore important to use leverage with caution and make sure you fully understand the risks before you start trading.

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