We will analyze the work of leverage on the example of cryptocurrency pair ETH/USDT on the KuCoin exchange

Yesterday I opened a Short trade. This is when we predict a market fall and try to make money on the market fall. This mechanism is not available on simple spot trading, only on the futures and perpetuals market

Now my results look like this:
+$699 or +12.46% to my deposit per 1 day

Entry price and marking price

The entry price is the price at the time we entered the trade. That is, I opened the trade at a price of $2,688.03. The marking price is the current market price

My position

In this screenshot, you can see what I've circled in yellow:
1. 2 ETH (I opened a trade for 2 ETH).
2. 3.81x is my leverage. That is, a 1% price movement with leverage will give me a 3.81% change in my position (profit or loss)
3. Margin is the amount of my position. Since I opened a trade for 2ETH and 1ETH was worth $2,688 at that time, the sum of my position is $5,736

I also want to remind you that I opened Short Position, which means:
Short = Sell High, Buy Low (Profit if price goes down)

And Long Position means:
Long = Buy Low, Sell High (Profit if price goes up)

PNL of your position (Profit and Loss)

To calculate the profit or loss on your leveraged position you need to do the following:
1. At the very top we can see how much % the price of ETH (Ethereum) has changed
2. Next, 3.81x is our leverage
3. To calculate how our position has changed we need to multiply the price movement (3.60%) by the leverage (3.81x) and calculate the percentage of our position (Margin = $5,376)

$5,376 * (3,60 * 3,81 / 100) = $737,37

The amount is not what we can see on the screenshot. But it is influenced by many factors, such as Funding Rate and changes in your position. But I will talk about this later and you will be able to understand it all by yourself during the training process

That's all I wanted to tell you about the mechanism of leverage on futures and perpetuals. If you have any questions or suggestions, write to me on my Telegram: @elizabethtrader_young_money

My channel:
https://t.me/binsuccess

I'd be happy to chat with you! A big profit for everyone

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