Good morning, CT ☀️
Another day to learn, grow, and get better than yesterday.
Still showing up, still learning, and still building with #CryptoWithShola.
Small steps, consistent effort. We move! 🚀
#cryptowithshola@itsSh0la@WEEX_Africa
I was going through Day 9 video of the Crypto Class with @itsSh0la when something on @highchiefebuka trade screen caught my attention.
In the screenshot below, i saw that we now understand what tp, sl, Liq Price, amount, entry price is. But then I saw 'margin' and i was like "where did these figures come from?"
What is even this margin? I first thought, "could this be part of the risk?" 🤔
If the planned risk was about 5 USDT, why was the margin less than 1 USDT?
I went digging, and here is what I found.
Margin and risk are two different things, even if both involves you losing money
Think of margin as the deposit required and locked from your total asset to open a trade.
It is the money the exchange requires you to set aside to support your position.
Risk is different.
It is the amount you stand to lose if the trade goes against you and your Stop Loss is triggered.
So in the screenshot,
Ebuka was opening a LONG position on SOL at $107, with a Stop Loss at $105 and a Take Profit at $122.
The position amount was worth 267.4 USDT, and the leverage was set at 300x.
Now, why was the margin so small?
That's because of the leverage used
The higher the leverage, the less money you need to put up as initial margin to control the same position size.
This is the calculation @WEEX_Africa used to get to that margin:
267.4 ÷ 300 = approximately 0.8913 USDT.
That is the estimated initial margin at 300x leverage, before any additional requirements.
If the leverage were lower, the initial margin would be higher, meaning you would need to put up more of your own money to control that same position.
It is important to note that,
A small margin does not still mean you have little money at risk.
Remember this trade was using Cross Margin, which means the exchange can use other available funds in the futures account to support the position
Let's say the account balance is 50 USDT.
If SOL falls from $107 to $105, that is a $2 drop for every SOL held. On a position worth 267.4 USDT at an entry price of $107, the loss would be approximately 5 USDT.
If the Stop Loss closes the trade at exactly $105, the account balance would fall from 50 USDT to roughly 45 USDT, before fees and funding.
Notice the difference?
The initial margin is less than 1 USDT, but the potential loss at the Stop Loss is about 5 USDT.
That is because margin is what you need to open and support the trade, while risk is what you stand to lose if the trade goes against you.
And with Cross Margin, more of your available account balance can be exposed to that trade.
One more thing: high leverage means less money is tied up as initial margin for the same position size, but it does not automatically make a trade safer or better. Leverage can also make liquidation more likely when the position is poorly managed.
So, never assume that a small margin means you have little to lose.
Sometimes, one number on a trading screen can send you back to the drawing board, and you end up understanding the whole thing a little better.
#CryptoWithShola
From Web3 to Bitcoin DeFi, NFTs, RWAs, Tokenization & Airdrops I’ve been putting the pieces together.
And one thing I’ve realized
The more you learn, the more you realize there’s still more to learn
Still learning. Still researching Still building #CryptoWithShola@WEEX_Africa
#CryptoWithShola@WEEX_Africa
1.Charts help you make smarter choices, but they can't see the future.
https://t.co/1l9yVsSOWL don't need every tool. Pick the ones that fit your style.
3.Use several tools together, never just one.
4.Always plan your exit before you enter.
•Indicators: math-based tools for trend, momentum, and volatility (RSI, MA, MACD, Bollinger Bands, volume)
•Geometric shapes: highlight zones, patterns, and entry points
•Alerts: notify you when a price or condition is hit, so you don't have to watch constantly
Why do crypto traders use the 4H timeframe on TradingView? 👀
I wanted to understand why I kept seeing traders analyse the 4H chart, so I did some research.
Here is what I found.
Imagine you are using Google Maps to find your way around a city.
If you zoom in too much, you can see individual people and cars, but you might struggle to understand the bigger traffic pattern.
If you zoom out too far, you can see the whole country, but you won't know which road to take to get to your destination.
The 4H chart is somewhere in between. It gives you a clearer view of the bigger picture while still showing you useful details.
But what does that mean when trading crypto?
1. It helps traders see the bigger picture.
On a 1 minute chart, prices can move up and down so quickly that it becomes easy to react to every little movement.
The 4H chart gives each candle 4 hours of price activity to show. This can help traders focus on the general direction of the market instead of getting distracted by every small move.
2. It helps identify support and resistance.
Think of support as an area where the price has previously struggled to fall below, while resistance is an area where it has struggled to rise above.
These levels are not guaranteed to hold, but the 4H chart can make important price areas easier to spot.
3. It can help reduce emotional trading.
Imagine buying a coin, seeing the price drop a little five minutes later, and immediately panicking.
Now imagine making your decision based on a bigger pattern rather than every small price movement.
The 4H chart can help traders avoid reacting to every little change. It doesn't eliminate risk, but it can encourage more patient decisions.
4. You don't have to watch the chart every minute.
Crypto trades 24/7, so staring at a screen all day is exhausting.
With the 4H chart, traders can plan around candle closes and review how the market is moving without constantly watching every tick.
So how do traders actually use it?
I came across a simple way to think about it: use three timeframes like three different maps.
🗺️ The Daily Chart: The big map. It helps you understand the overall market direction.
🛣️ The 4H Chart: Your main route. It helps you identify trends, support, resistance, and possible trading setups.
🔎 The 15M Chart: The close-up view. Some traders use it to look for a more precise entry after identifying a setup on the 4H chart.
Of course, not every trader uses these exact timeframes, and using all three does not guarantee a profitable trade.
The idea is to let each timeframe answer a different question instead of making a decision from one chart alone.
One thing I'm learning about crypto is that trading isn't just about knowing when the price is moving. It's also about understanding what that movement means in the bigger picture.
Sometimes, zooming out helps you see what you were missing up close.
#CryptoWithShola