Guide to Using Leverage on Websea

Leverage in margin trading is a powerful tool that amplifies trading potential on Websea. While it can substantially increase your returns, it also comes with heightened risks. Understanding how to use leverage effectively and safely is crucial.

What is Margin Trading?

Margin trading involves borrowing funds from the platform to trade larger amounts with a relatively small capital investment. This method increases your investment exposure and potential returns but also amplifies the risk of losses. Due to the high volatility of digital assets, it's essential to fully understand the risks of margin trading before engaging.

Using Leverage to Profit from Price Increases

For example, consider BTC/USDT where the current BTC price is 8000 USDT. With an initial capital of 8000 USDT and using 3x leverage, you can borrow 16,000 USDT from the platform, allowing you to buy 3 BTC. If the price rises to 10,000 USDT, selling these BTC would yield 30,000 USDT. After repaying the borrowed 16,000 USDT plus interest and excluding your initial 8000 USDT, your profit is about 6000 USDT. This demonstrates how a 25% price increase in BTC can lead to a 75% gain using 3x leverage.

Using Leverage to Profit from Price Decreases

In another scenario, with the BTC price at 10,000 USDT and holding 1 BTC, using 3x leverage, you can borrow 2 BTC and sell a total of 3 BTC. If the price drops to 8000 USDT, you can buy back 3.75 BTC. After returning the 2 borrowed BTC and paying interest, excluding your initial 1 BTC, your profit is about 0.75 BTC. Here, a 20% price drop in BTC results in a 75% gain due to the leverage.

Margin Loan Rate Calculation

The margin loan rate is calculated once when the margin application is successful and then recalculated daily at 00:00.

Risks of Margin Trading

While leverage can lead to greater returns, incorrect market judgments can exponentially increase losses. It's advised for traders, especially those less experienced, to use leverage cautiously to avoid liquidation or account deficits.

Reducing Margin Risk

• Control Position Size: Use leverage ratios sensibly and avoid heavy positions.
• Timely Profit and Loss Stops: Implement stop-loss and take-profit strategies to manage risks actively.

Additional Margin: Ensure your total assets/leverage quota ratio is greater than 110% to avoid liquidation.