How does leverage work?

Leverage is a key feature of a hi5markets trading platform, and can be a powerful tool for a trader. You can use it to take advantage of comparatively small price movements, ‘gear’ your portfolio for greater position size, and to make your capital grow faster.

Leverage works by using a deposit, known as margin, to provide you with increased exposure. Essentially, you’re putting down a fraction of the full value of your trade – and hi5markets is providing you the rest. Our products allow traders to gain exposure to major cryptocurrencies, such as Bitcoin and Ethereum and others, without tying up lots of capital.

BTC/USD trade example

For example, you want to buy 10 Bitcoins at a price of $10,000.

To open such trade with a traditional exchange, you would be required to pay 10 x $10,000 for a position of $100,000 (ignoring any commission or other charges). If the Bitcoin price goes up by 5%, your 10 Bitcoins are now worth $10,500 each.

If you choose to sell, then you’d have made a $5,000 profit from your original $100,000 investment.

1:100 leverage trade with hi5markets

Here you’d only have to pay 1% of your $100,000 position, or $1,000 to open such trade. If the Bitcoin price rises by 5%, you would still make the same profit of $5,000, but at a considerably reduced cost.

That means that profits can be hugely multiplied.

Profit from market growth

Profit from market decline

Calculating Profits

  • Magnified profits. You only have to put down a fraction of the value of your trade to receive the same profit as in a conventional trade with any other exchange.
  • Gearing opportunities. Using leverage can free up capital that can be committed to other investments. The ability to increase the amount available for investment is known as gearing.
  • Gaining from the market fall. Using leveraged products to speculate on market movements enables you to benefit from markets that are falling, as well as those that are rising.

Calculating Profits

  • Magnified profits. You only have to put down a fraction of the value of your trade to receive the same profit as in a conventional trade with any other exchange.
  • Gearing opportunities. Using leverage can free up capital that can be committed to other investments. The ability to increase the amount available for investment is known as gearing.
  • Gaining from the market fall. Using leveraged products to speculate on market movements enables you to benefit from markets that are falling, as well as those that are rising.

You are moments from leveraged cryptocurrency trading

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