As the days go by, different types of trading methods are being seen in crypto trading. One of them is Leveraged token trading. Many people are confused when it comes to trading without knowing exactly what a leveraged token is.
Today this topic is for those people who are interested in trading in Leveraged token but are confused or do not have the courage to know what Leveraged token is and how it works.
So let's try to figure out what a leveraged token is and how it works.
What is a leveraged token?
All of us who trade in margin trading or futures are aware that good quality profits can be made by trading with margin in margin trading or by increasing leverage in futures trading with very little balance.
However, like futures trading, there is no problem of liquidation when trading in Leveraged token tokens.
All the coins you see in the leveraged token are connected with 3X leverage. In other words, all the tokens in the leveraged token are pre-set 3X connected leverage. And this is why all these tokens are called Leveraged tokens.
The names of the leveraged tokens are usually as follows: ETHBULL, ETHBEAR, BTCBULL, BTCBEAR etc.
That is, each token has two names. One is BULL and the other is BEAR.
The way the leveraged token works
Before trading on a leveraged token, it is important to know how these tokens work. Because if you don't know how the price of these tokens goes up or down, you will be confused.
As I said before, Leveraged tokens are connected with 3X leverage. And the price of these tokens is affected by the main token price of that token. This means that if you buy ETHBULL or ETHBEAR tokens, the price of those tokens will increase or decrease depending on the price of the main token i.e. ETH.
Suppose you bought the ETHBULL token. Now if the price of ETH increases by 1%, your purchased token will increase by 3%. This means that if you bought ETH and its price increased by 1%, you would get 1% profit there. On the other hand, if you buy ETHBULL, if the price of ETH increases by 1%, you can make 3% profit on ETHBULL.
Isn't that funny?
But there is nothing to be too happy about. Because if the ETH price goes down 1% in the same way, you have to accept 3% loss if you have ETHBULL. Where ETH or 1% loss would have been.
Now the matter may not be interesting anymore.
Thus if there is ETHBEAR then if ETH goes down 1% then ETHBEAR will go up 3%. ETHBEAR means the price of this token will increase whenever ETH goes down. In other words, the price of all the tokens called BEAR in the leveraged token increases if the price of the original token goes down. This is why this token is named BEAR.
Let's look at what we have understood so far in a short chart.
ETH 1% up = ETHBULL 3% up
ETH 1% down = ETHBULL 3% down
ETH 1% down = ETHBEAR 3% up
ETH 1% up = ETHBEAR 3% down
Where can I get the benefits of Leveraged token trading?
Currently, several exchanges have introduced leveraged token trading facilities. If you are looking for a reliable and secure exchange to trade on Leveraged token, I will keep talking to you.
Yes, it is true that FTX Exchange was the first to launch this leverage token. However, you can trade futures with spot, margin, as well as Leveraged token in the balance using an account.
Which is why I think if you want to trade on the Leveraged token, it would be better to do so in the balance.
If you do not have an account with Binance, create an account from here now. Take with you 10% + 25% = 35% trading fee-back facility.
Is it okay to trade in leveraged token?
If you have good trading skills in margin or futures trading, you can trade in Leveraged token.
And if you are not proficient in that subject, it is better to refrain from leveraged token trading.
Now it depends on your skill whether to trade in Leveraged token. It is up to you to decide whether it is right to trade the tokens in the Leveraged token considering your own trading skills.
Thanks for Reading......
