How do I determine the collateral required to leverage a crypto trade?
Asked 3 years ago
Good morning. I consider myself a beginner when it comes to crypto trading. I've looked at the different trade strategies and decided to start with swing trading. However, I don't know how to determine the collateral I need should I lose the trade. Do the leverage and total value of the position I want to open determine the collateral required to leverage a crypto trade?
Courtney Blankenship
Wednesday, August 10, 2022
The required collateral to leverage a crypto trade depends on how high your leverage is, as well as the broker in question. In the vast majority of cases, the collateral required holds the same ratio as the leverage. This means that if you have a 10x leverage, and you're trading with $2,000, you need to have a 10th of the position as collateral - in this case $200.
Namely, the formula for calculating this is dividing the position size with the leverage.
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