Hello Crypto Friends!
I thought i would explain cross leverage in this post and the advantages and disadvantages of using it vs fixed leverage.
So what is cross leverage?
Cross leverage basically uses your whole balance as margin at the highest leverage available which therefore gives you a wider spread on your liquidation price.
Oh that sounds risky!! Well yes it can be without proper risk management.
But as you all know where there is risk there is reward!
It all comes down to your stop loss and calculations, if done correctly then cross leverage is very useful and highly rewarding.
Lets say for example this was your trade setup. 3.1 risk reward, not bad!
Now lets say you have $1000 balance. You are willing to risk 5% on this trade.
You take your balance and you times it by your risk amount.
1000 x 0.05 = $50
Now, your stop loss, which you must never forget, is at 2.29%. So you take the $50 and you divide it by your stop loss.
50/0.0229 = $2183
This is the amount you can trade on cross leverage.
Now you can use 100x leverage and not be afraid to do so.