The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

Before answering this question, the editor of Bitcoin Circle will first talk to you about Bitcoin leverage. Bitcoin leverage is a kind of financial derivative. Like traditional financial derivatives, financial leverage is simply a multiplication sign. Use this Tools can amplify the results of investment. Regardless of whether the final result is a gain or a loss, it will increase at a fixed ratio. After understanding Bitcoin leverage, let’s get back to the topic. How to calculate the Bitcoin leverage multiple? Below, the editor of the currency circle will tell you how to calculate the Bitcoin leverage multiple.

## How to calculate Bitcoin leverage ratio?

Actual leverage ratio = (position margin * contract multiple) / total amount of funds

Assume that your account has 10,000 yuan, use this formula to deduce what 3 times leverage is

3000 (margin) * 10 (contract multiple) / 10000 (account funds) = 3 (actual leverage multiple)

In more understandable terms, the position value is 3 times the account amount.

The margin is 3,000 yuan and the contract multiple is 10 times. The value of the position you established at this time is 30,000 yuan.

But your principal is 10,000 yuan, that is, your position is 3 times the principal. This situation is called 3 times leverage.

## How to scientifically set the Bitcoin trading leverage multiple?

In fact, given how volatile the crypto market is, in most cases traders don’t actually have to use leverage. Of course, when using leverage, be sure to set a stop loss. So, how do you choose the leverage multiple for each transaction? Here are a few examples to illustrate.

Example 1: Assume the stop loss is $9,400 and the risk you are willing to take is 2% of the account. If we were at 10000
If you go long on the US dollar, then the drop from the opening price to the stop loss price is (10000-9400)/10000 = 6%. The calculated position size is 2/6=33%, so there is no need to add leverage.

Example 2: Assume the stop loss is $6,200 and the risk you are willing to take is 20% of the account. If we were at 10000
If you go long on the US dollar, then the drop from the opening price to the stop loss price is (10000-6200)/10000 = 38%. The calculated position size is 20/38=53%, and there is no need to add leverage.

Example 3: Assume that the stop loss point is $10,700 and the risk you are willing to take is 4%. If we were at 10950
If you go long on the US dollar, then the drop from the opening price to the stop loss price is (10950-10700)/10950 = 2.3%. The calculated position size is 4/2.3=174%. At this time, 1.74 can be set
times the leverage multiple.

In addition, there is another way to calculate using the ATR (average true fluctuation, which is the moving average of the price fluctuations within a certain time period) indicator. Check the 4-hour ATR (200) indicator, multiply by 3, and assume that we get
$600. Convert the value to a percentage. If the current price is $10,000, then 600/10,000 = 6%. Assuming the maximum account risk is 3%, the maximum position size is
50%, no leverage required.

Alex believes that the leverage multiple should be determined by two factors: the setting of the stop loss point and the investor's risk tolerance and confidence. In itself, leverage is not a strategy, but a tool to help investors formulate strategies.

When using high leverage, investors need to set a stop loss close to the opening price. But in many cases, leverage is just trading noise. I believe that high leverage should be used during breakouts and in some extremely oversold situations.

In addition, many users have certain misunderstandings about the isolated margin model. In the isolated position mode, the leverage multiple only represents the multiple of this position, not the actual multiple. In fact, this is just a lazy way to set a stop loss. After all, your biggest loss is only the margin in this position.

Through the above introduction, I believe everyone has some understanding of the issue of how to calculate the Bitcoin leverage multiple. In the final analysis, leveraged trading magnifies the returns of ordinary transactions and also magnifies the risks of transactions. Therefore, the editor of Bitcoin Circle would like to remind investors not to Blindly choose the Bitcoin leverage multiple. For newbies in the currency circle, do not try leveraged trading easily. After all, the risk of leveraged trading is very high, and not all investors can bear this risk.