Bybit Leverage Trading: Helpful Tips You Need To Know

The massive trading volumes in the crypto world have driven some traders to fear missing out on huge trading winnings during the last few years. Bybit Leverage trading has risen dramatically as a result of this worry. Although leverage trading allows traders to start with a lesser initial commitment, it also comes with a high level of risk.

Once you’re done practicing in a simulator, then it’s safe to say that it’s time for you to begin trading with real money. So, in this article, I’ll go through topics to think about before getting into trading Bybit, such as the pros and cons of leverage trading and how safe it is.

Pros and Cons of Bybit Leverage Trading

Here are the PROS:

  • Free Simulator to practice trading – Bybit features a testnet site where beginners can practice trading methods and learn how to use the platform without risking their own money. It’s a good approach to become acquainted with these advanced — and often confusing — tools if you’re new to derivatives.

    Because leverage trading is quite risky, it’s a good idea to practice in a simulated environment before investing your hard-earned money. Start modest and take into account how to reduce risk if you wish to trade for real.
  • Trade up to 100x – Bybit offers up to 100x leverage when trading cryptocurrencies. This implies that a $100 investment could result in a $10,000 trade. Because leverage trading increases potential trading gains, experienced traders can benefit handsomely from it. However, the risk is amplified.

    On the 15 currencies available, users can go long or short (bet on the price rising or falling, respectively). Bybit provides a variety of specialized trading options.
  • Bybit is equipped with innovative technology to fasten up your trading transactions – Bybit claims to be able to process 100,000 operations per second, much outpacing its competitors. It goes a long way in preventing any server downtime, which is a problem that a few exchanges have any time the market forces a large number of individuals to trade at the same time.

    Traders like its charting tools because they have a lot of functions and extra features. Data can also be accessed in a variety of forms.

Meanwhile, here are the CONS:

  • Leverage Trading in Bybit is restricted to the US – US Citizens are not allowed to use Bybit. Bybit’s decision to exclude American traders was determined by the platform itself. They did so due to a lack of clarity in the United States crypto legislation. Bybit chose to remain away from the US market entirely rather than risk being sued by US regulators such as the SEC.

    Bybit, along with a few other platforms like BitMEX, FTX, and Binance, is a highly coveted exchange that, according to their regulations, prohibits U.S. traders from trading. Don’t forget that Bybit also offers derivatives, such as options and futures trading, giving consumers even more trading possibilities. It’s no surprise that being unable to utilize Bybit is a pain for any crypto trader in the United States.

    To prevent them from using Bybit, the platform constantly monitors user IP addresses and blocks any that originate in the United States. If you use a VPN (Virtual Private Network), however, you may access Bybit even if you live in the US.
  • Limited Pairs – At the time of writing, Bybit enables 136 cryptocurrencies that may be acquired on its spot exchange. Bybit’s asset selection is extremely limited when compared to well-known exchanges like Binance and FTX, which offer 401 and 397 coins, accordingly.

How does Leverage Trading in Bybit work?

Bybit has no KYC requirements, therefore all you need to open an account is a phone number or an email address. You can deposit cryptocurrency or buy Bitcoin with fiat (traditional) currency through a third-party app.

On the Bybit exchange, you can trade Bitcoin with a leverage of up to 100x. Consider leverage trading as the ability to open a position worth more than the initial margin you are risking to open the position. When it comes to leverage trading, it’s crucial to remember that margin trading comes with both great rewards and big hazards.

For instance, if you place a Bitcoin(BTC) position on Bybit with $1000 in BTC and a 10x leverage, your total position value will be $10,000. This means that even if the Bitcoin price only rises by about 1%, you will make a 10% profit on your initial margin. If you use 25x leverage and the price of Bitcoin rises 2%, your return on investment would be 50%, and so on. Of course, if prices go in a reverse way, but with negative returns, the same might be argued.

To optimize your gains, you are essentially “borrowing” Bitcoin from the exchange. However, something is known as the “liquidation price,” which comes with a risk. Let’s put up another example:

If we initiate a $1,000 Bitcoin position on Bybit with 10x leverage, our profits will increase by tenfold if the Bitcoin price rises. If the price drops 10%, however, we will achieve our liquidation price. If you choose 100x leverage (the highest leverage available on Bybit), a 1% drop in the Bitcoin price is all it takes to reach the liquidation price. Simply said, larger leverage means the liquidation price will be closer to your entry price, posing a greater risk. 

As a result, you should always set up a stop loss to avoid the leverage position from being liquidated. 

3 Main Types of Order You Can Make

There’s a lot more to Bitcoin trading than just “buy” and “sell.” So, if you need to learn how to trade properly, you must first understand the following information. You can go long (bet on the currency increasing in value) or short (bet on the currency decreasing in value) (bet that the currency will lose value). The three basic sorts of orders you can place are as follows:

  1. Limit Order: When you place a limit order, you are a market maker since you are giving liquidity to the order book when your order is filled. Until the price reaches your limit order price level, your order will remain in the order book. You can choose not to pay transaction fees in this case.
  2. Market order: In here, you take the best price available in the order book and the order executes immediately. As a market taker, you will be responsible for any fees associated with the transaction.
  3. Conditional order: The Conditional Order can be used to go long when the price lowers to a specified level. Let’s imagine the Bitcoin price is $10,000 and you want to buy Bitcoin if the price drops to $9,000 in the future. In this situation, you can set a conditional order at $9,000, because if this level is reached, an automatic market or limit order will be placed, depending on the order type you select.

Is Bybit Safe?

To protect your assets, Bybit has implemented a number of security precautions. Users’ monies are kept entirely offline and secured. To prevent unauthorized withdrawals, it also carefully examines each withdrawal request.

Bybit participates in a bug bounty program (a program offered by a few websites, organizations, and software providers in which users can be recognized and compensated for reporting bugs, particularly those related to security exploits and vulnerabilities.

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