Leverage
Leverage in the realm of cryptocurrency trading refers to the practice of using borrowed capital as a funding source when investing in digital assets. This strategy allows traders to open a position that is larger than the amount of funds they have deposited, typically in the form of stablecoins. The leverage size determines the magnification of the initial deposit, enabling traders to potentially reap larger profits. However, this approach also carries significant risk. If the market moves in the opposite direction, losses can be amplified. In such cases, if a trader's account lacks sufficient funds to cover these losses, their position may be liquidated. This category includes various projects and blockchains that facilitate or are related to leveraged trading. It's crucial for traders to understand the risks associated with leverage and to employ effective risk management strategies when engaging in such trades.
