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What is Dynamic Leverage in Cryptocurrency Trading?


Leverage is a beautiful invention in trading. It is not specific to crypto alone. 

Crypto is a relatively new asset class, leverage originally had a base in traditional markets. 

Here, a broker allows a trader to trade much more than they would ordinarily have, exposing them to more trading opportunities. It is exciting. 

However, since brokers vary different products, leveraging power also changes.

In CryptoAltum, a trader can leverage at most 500X. 

Accordingly, a trader who deposits $360 can leverage 500X and trade over five standard lots of BTC at a spot rate of $36k.

However, leverage styles vary. 

CryptoAltum, for instance, uses the Dynamic Leverage model. Here, the exchange automatically adjusts the overall account leverage depending on the number of open positions and volumes traded. 

Thus, overall permissible leverage of any margin account changes depending on open positions and profitability/loss. 

Interestingly, Dynamic leverage can also be fashioned to work differently. 

For instance, leverage can be recalculated based on the margin requirements after every trading event. 

The other style calculates margin requirements only whenever a position is opened. The leverage is constant throughout the lifetime of the position.


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Risk Disclosure: Trading cryptocurrencies or any other financial instrument involves a significant level of risk and may result in a total loss of your investment. You should consider carefully whether investing in Bitcoin or any other instrument offered by CryptoAltum is appropriate to your financial situation. CryptoAltum only accepts deposits in Cryptocurrencies. By trading with CryptoAltum you acknowledge your understanding of this risk disclosure and your agreement with the Terms and Conditions.
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