LEVERAGE allows you to enter more position if you don't have enough capital but your EXPOSURE is exactly the same!
No matter the LEVERAGE you use your PROFIT/LOSS will be exactly the same! (Actually if you use higher leverage you are going to pay more fees like an idiot), so if you have enough trading capital and you have to choose between 5x or 10x leverage, you should ALWAYS pick the lower leverage cause you will pay less fees and your PROFIT at the end will be exactly the same. If you are aiming for a 3R trade, you are going to win 3% if you risked 1% no matter the leverage you used!!!!
Bitmex Fees Example: To open and close an 100x leveraged position you are going to pay about 15% of your actual cost in fees! Why? Because you are paying fees based on the leverage you are using. Bitmex fees most of the time is going to be 0.075%. So if you want to open a 100x leverage position, you are going to pay 0.075% on each order times your leverage (times 2 because you have to also close your position):
$1000 (cost) x 100 (leverage) x 0.00075 (0.075%) x 2 = $150 (which is 15% of $1000 cost)
Or you can just do $1000 * 100x (leverage) = $100.000 * 0.075% * 2 = $150
- ROE % is your Percentage profit based on your COST. You MUST also take care of your RISK!!! R:R is way more important than your ROE which does not reflect your real PROFIT based on your Total Portfolio and based on your RISK! (In 2 words ROE means shit if you don't have a RISK profile).
And please... once for all STOP 🚫 being brainwashed from traders who tell you this:
"You would have made:
100% with 10x leverage
250% with 25x leverage
1000% with 100x leverage"
The only thing this means is that they don't know what the HELL they are talking about!!!
You would have made the EXACT SAME DAMN PROFIT in all 3 cases!!! As the picture says above EXPOSURE is the same, CAPITAL REQUIRED is lower if you use any type of leverage (because you are borrowing money which allows you to enter more positions = more opportunities = more money).
For further any queries
Ask @luckys
Posted using Partiko Android