Home > How to Leverage Trade Crypto in 2025 > How to Leverage Trade Crypto in 2025
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Written by Charles
Hi, I'm Charles Johns, a Finance graduate with a specialization in Financial Management from the University of Chicago. My journey through financial markets has fueled a passion for both traditional and digital assets, where I continuously explore evolving investment opportunities. As an active trader and cryptocurrency enthusiast, I strive to bridge the gap between complex financial concepts and practical, real-world applications. My goal is to empower everyone, whether seasoned investors or newcomers, with valuable insights and knowledge to confidently navigate the world of finance and crypto investing.
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This article has been reviewed by crypto market experts at SCM to ensure all the content, sources, and claims adhere to the highest standards of accuracy and reliability.
Last Updated on January 27, 2025
Leverage in crypto trading allows you to amplify your positions without investing a total amount upfront.
Bybit is a platform that facilitates this through various types of leveraged tokens and futures trading options.
To leverage crypto on Bybit, you must understand how to trade these futures contracts and utilize the platform’s tools to manage your investments effectively.
When you trade on Bybit, you buy and sell contracts representing the underlying crypto assets, such as BTC or ETH.
Using leverage lets you control a more prominent position than your initial investment, which can significantly enhance your potential returns.
This method also reduces the margin and liquidation risks compared to traditional leveraged trading.
Bybit offers a user-friendly interface where you can easily access the spot and futures market, stake your coins, or trade various altcoins and NFTs.
Leveraged tokens allow you to invest in a basket of futures contracts with minimal hassle, providing a more manageable way to explore advanced trading strategies.
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Choosing the proper exchange is crucial. Bybit offers competitive fees, robust security, and an intuitive user interface.
Available leverage ratios vary, with some going up to 100x. Bybit’s leverage offerings compare favorably to Binance, BitMEX, BingX, and Kraken.
Step-by-Step Registration Process:
Complete identity verification (KYC) to ensure account security and unlock additional benefits:
There are several ways to fund your Bybit account:
By following these steps, you are ready to engage in leverage trading on Bybit, utilizing its extensive features and competitive offerings.
Step 1: Select the Trading Pair
Choose the cryptocurrency pair you wish to trade on Bybit, such as BTC/USDT. Make sure to consider the liquidity and volatility of the selected pair. More liquid pairs often offer tighter spreads and better execution.
Step 2: Choose Leverage Ratio
Next, decide on the leverage ratio you wish to use, such as 10x or 20x. Remember, higher leverage increases both potential profits and potential losses.
Example: A 10x leverage on a 1% price change can magnify your gains or losses by 10%.
Step 3: Enter the Trade
You have two options when entering a trade:
Example: Using 10x leverage to buy $1,000 worth of BTC with only $100.
Step 4: Set Stop Loss and Take Profit Orders
Setting predefined profit or loss levels is crucial. Stop-loss orders help you limit potential losses while taking profit orders secures your gains. Here’s how to set these on Bybit:
This helps you manage risk and secure profits without constant monitoring.
Step 5: Monitor and Adjust the Trade
Constantly monitor market conditions. Adjust your stop loss and take profit orders as needed based on market movements. This adaptive approach helps you lock in profits and mitigate risks effectively.
Mitigating risk in leveraged trading on Bybit involves understanding critical concepts like initial and maintenance margins and effectively monitoring your account value to avoid liquidation.
The initial margin is the collateral you need to open a leveraged position on Bybit.
It acts as a security deposit to cover potential losses. For example, if trading with 10x leverage, you must put up 10% of the total position value as the initial margin.
The maintenance margin is the minimum amount of equity you must maintain in your account to keep a position open. If your equity falls below this level, Bybit will liquidate your position to prevent further losses.
To illustrate, if Bybit’s maintenance margin is 0.5% and your position value is $10,000, you must keep at least $50 in your account to avoid liquidation.
Keeping your account value above the maintenance margin is crucial to prevent forced liquidation of your positions.
Monitoring your account value dynamically is essential for effective risk management on Bybit.
One strategy is to set up alerts that notify you when your account value approaches the maintenance margin level.
This lets you take preventative action, such as adding more collateral or closing positions before liquidation occurs.
Bybit provides various tools, including real-time tracking of positions and margin levels.
The platform also offers features like stop-loss orders, which can automatically close a position once it reaches a predetermined loss level, limiting your risk.
Using these tools effectively can help you maintain your account value and manage risks better.
This section illustrates two real-world scenarios.
The first example demonstrates a successful leverage trade, highlighting key factors contributing to profit. The second case study examines the consequences of poor risk management.
Imagine you leverage trade Bitcoin (BTC) on Bybit with a 10x leverage.
Suppose BTC is priced at $30,000. You use $1,000 of your capital as the initial margin, effectively controlling $10,000 worth of BTC.
If the price of BTC increases by 10% to $33,000, the value of your position becomes $11,000. This results in a profit of $1,000, which is 100% of your initial margin. A 10% increase would only yield a $100 profit without leverage.
This example shows how leveraging can significantly enhance your returns when the market moves in your favor.
In this case study, consider a trader who leverages BTC with 20x leverage but does not set a stop loss. The initial margin is $1,000, allowing control over a $20,000 position.
If the BTC price drops 5%, the value falls to $19,000.
In a 20x leverage scenario, a 5% decline translates to a 100% loss of the initial margin. Without a stop loss to limit losses, the entire $1,000 is lost.
This highlights the critical importance of risk management and the potential hazards of high leverage without protective measures.
Leveraged Tokens
Leveraged tokens are financial instruments designed to give you leverage in trading without the complexities of managing collateral, margin, or liquidation risks.
These tokens represent a basket of positions in the underlying asset but with a built-in leverage multiplier.
Examples of popular leveraged tokens available on Bybit include BTC3L and ETH3S, where “3L” stands for 3x long and “3S” stands for 3x short positions. These tokens automatically adjust their leverage to maintain a consistent exposure, simplifying the trading process.
Benefits of using leveraged tokens:
Liquid Staking Protocols
Liquid staking protocols like Lido allow you to stake crypto assets and receive a tokenized version of the staked asset. This token can subsequently be used to leverage trade on platforms like Bybit.
Leveraging staked assets involves using these tokenized versions to take additional exposure in the market.
For example, if you stake ETH through a liquid staking protocol and get tokens like stETH, Bybit enables you to use these tokens as collateral to gain access to more trading capital.
These methods allow you to enjoy staking rewards while also having the ability to engage in leverage trading, offering a unique dual-benefit approach.
Leverage trading on Bybit offers exciting opportunities for those with experience and a firm grasp of market analysis.
By understanding the various order types, you can better control your trades and manage risk effectively.
Leveraged tokens allow you to amplify potential gains without the traditional risks associated with margin or liquidation.
Key Points to Remember:
Using leverage can enhance your trading experience, but it’s crucial to approach it with caution and proper knowledge. Making informed decisions will help you navigate the complexities of the crypto market more effectively.
Stay updated on market trends and continuously refine your strategies for the best possible outcomes. Engaging with the trading community and leveraging available resources can provide valuable insights.
Successful leverage trading on Bybit is not just about potential profits but also about mitigating risks and maintaining discipline.
Hi, I'm Charles Johns, a Finance graduate with a specialization in Financial Management from the University of Chicago. My journey through financial markets has fueled a passion for both traditional and digital assets, where I continuously explore evolving investment opportunities. As an active trader and cryptocurrency enthusiast, I strive to bridge the gap between complex financial concepts and practical, real-world applications. My goal is to empower everyone, whether seasoned investors or newcomers, with valuable insights and knowledge to confidently navigate the world of finance and crypto investing.
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