Core Concepts
No Ownership Required:You don’t need to hold Bitcoin, Ethereum, or any crypto. You’re only trading on price changes.
Two-Way Trading:Go long (buy) if you think the price will rise, or short (sell) if you expect a drop—profit either way.
Leverage:Control a large position with a small amount of capital. (e.g., 10:1 leverage means $100 can control a $1,000 trade.)
Trading Process
Opening a Position
Choose a crypto pair (e.g., BTC/USD, ETH/USD).
Decide your direction: Buy (long) or Sell (short).
Set contract size and leverage ratio.
Holding the Position
Profits and losses change in real time as prices move.
Monitor margin levels to avoid liquidation.
Closing the Position
Execute the opposite trade to close it.
P/L = (Closing Price – Opening Price) × Contract Size
Key Terms to Know
Leverage
Amplifies gains and losses (e.g., 50:1 means a 1% price move equals 50% account change).
Spread
Difference between buy/sell price (e.g., BTC quoted at $50,000/$50,100 = $100 spread).
Overnight Fee
Interest charged for holding positions overnight.
Margin Call / Liquidation
If your margin drops below the broker’s threshold (e.g., 20%), your position may be closed automatically.
Example Calculations
Long BTC Example
Entry: $60,000 (1 lot = 1 BTC, 10:1 leverage, margin = $6,000)
Exit: $63,000
Profit = ($63,000 – $60,000) × 1 = $3,000 (50% return)
Short ETH Example
Entry: $3,000 (1 lot, 5:1 leverage, margin = $600)
Exit: $2,700
Profit = ($3,000 – $2,700) × 1 = $300 (50% return)
Closing the Position
Execute the opposite trade to close it.
P/L = (Closing Price – Opening Price) × Contract Size
Pros & Risks
Pros
No need for wallets—avoid hacking risks.
Trade 24/7, even when exchanges are closed.
Leverage boosts capital efficiency.
Risks
High leverage can lead to fast losses or liquidation.
Extreme volatility (e.g., ±20% daily swings are common).
Broker risk—use regulated, trusted platforms.