Traders who set leverage are choosing how fast to lose.
Traders who set risk are choosing whether to.
That's Chapter 7 of my book, Crypto Trading Dominance.
Free 15-page preview β foreword, full contents and this chapter:
https://t.co/UItkB2uqcD
Leverage does not multiply your returns.
It multiplies your position β and shrinks the distance between you and liquidation.
At 25x, an ordinary Tuesday on BTC is enough.
Watch what happens π
Choose two other numbers instead:
β What you'll lose on this trade, in currency, decided before you open the chart
β The price at which your idea is simply wrong
Size falls out of the gap between them.
Leverage becomes an output. Usually an unimpressive one. That's the point.
ethereum:0xfaba6f8e4a5e8ab82f62fe7c39859fa577269be3 is showing real strength as we also see it being coupled with significant open interest growth over the last 3 days.
In fact, over the last three days, it sits as one of the leaders in increase in open interest (+41%)
MSTR - POVERTY FINANCE EDITION
Allow me to scale Strategy's balance sheet down by 10,000,000x and tell you a tale.
A family owns $5,408 of Bitcoin. They believe this asset will appreciate between 20%-30% per year.
They have $255 in the bank, owe $675 some loans with staggered maturities over the next few years, and they pay their rich relatives $14.69 per month because they contributed $1,546 to the operation.
The familyβs Bitcoin alone could cover those payments until roughly 2057, yet the neighborhood Facebook group is conducting daily forensic analysis on whether the August payment will bankrupt them.
Yes, their monthly dividend bill is $14.69 and they have $5,408.
Do you think they can survive until Bitcoin goes back up?