/biz/ - Business & Finance

>>10631286
So many people misunderstand this shit it's not even funny.

You need to think of leverage is a DIVISOR, not a multiplier.

If you have a position of 1000 contracts at 10x leverage, you are using $100 worth of your own contracts, and Jimmy Whale is lending you the other 900.


Say bitcoin is at $10000.
You're long 1k contracts at 10x as explained above. Notional value of the position is $1000 (0.1btc).
Btc goes up 1% to $10100. Now your position is worth $1010.
You sell immediately (ignore fees, funding etc. for this example), receiving 0.101btc ($1010).
You pay Jimmy whale back the 900 contracts you borrowed. 1010 - 900 = 110
You now have $110.

Total profit 10$, ROE 10%.

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