Leverage Trading

Leverage Trading allows traders to borrow funds (leverage) to open positions larger than their own capital. This means:

You can amplify profits if the market moves in your favor.
You can take long positions (betting the price will go up) or short positions (betting the price will go down).
You don’t need to hold the underlying asset to speculate on its price.
You can use leverage to take advantage of market volatility.

Amplified returns: Trade larger positions with less upfront capital.
Short selling: Earn profits when markets decline.
Efficient capital use: Keep more of your funds available while still trading at scale.
Risk management: When used carefully (moderate leverage, diversification), leverage can help hedge other positions.

Liquidation risk: If your margin falls below the maintenance requirement, your position can be liquidated.
Magnified losses: Losses grow as fast as profits when the market moves against you.
Interest & funding costs: Holding leveraged positions often requires paying interest on borrowed funds or periodic funding rates.
Market liquidity risk: In volatile markets, spreads can widen and execution may be less favorable.
Complexity: Requires strong understanding of margin, fees, and collateral mechanics.

Collateral requirement: You must deposit collateral to open and maintain leveraged positions.

Margin usage: Collateral determines your initial margin (to open) and maintenance margin (to keep the position open).

Fee payments: Fees, interest, and funding costs may be deducted directly from collateral

Accepted assets: Danogo defines which tokens can be used as collateral (commonly stablecoins and major tokens).

Last updated 1 month ago