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Futures Trading: Leverage and Risk in Cryptocurrency Markets
Futures Trading: Leverage and Risk in Cryptocurrency Markets
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Futures trading remains a high-stakes arena where leverage magnifies both profits and losses with equal intensity. The initial margin mechanism allows traders to control substantial notional values with minimal capital, creating unparalleled capital efficiency. Yet, this same leverage can trigger rapid, devastating losses—sometimes exceeding the initial deposit.
Margin calls serve as the clearest warning of this structural risk. When positions MOVE against traders, equity can plummet below maintenance thresholds, forcing immediate action. Unlike stock trading, where leverage often involves broker loans, futures rely on "good faith" deposits, amplifying market volatility's impact on portfolios.
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