I never traded crypto before but I heard BTC was going to end high this year so I bought BTC with 5x leverage on Kraken. Are there any caveats I should look out for?
Auto liquidate if margin level falls too low
Market conditions don't allow you to liquidate before the crash
Hackers?
Hidden terms and conditions
Taxes
Misleading information
Appreciate any advice :)
#blockchain #bitcoin #crypto #investing #kraken #BTC #advice
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comments
"I heard BTC was going to end high this year so I bought BTC with 5x leverage"
What an idiot
"Are there any caveats I should look out for?"
Yeah, how about the fact that the whales are literally manufacturing price action to liquidate noob positions like yours. That's what we just saw a couple of days ago.
Don't use leverage if you're new. Don't be greedy. You're taking a huge amount of risk to make it this late in the bull run. Just buy spot and be happy with 2-3x gains. You're asking to get rekt.
This is financial advice. Sell your position and convert to spot
Edit - ambitious bulls like op pick up several long positions with leverage. Then, a small price decrease triggers an avalanche of stop losses to cover.
If you don't understand these comments, you're not fit to be taking leverage. That's why Kraken warns you when you first start leverage trading. You wrongly agreed to be a high net individual with an excess of 10m.
- Yes, you will definitely get auto liquidated if your debt ratio exceeds the exchange’s limit (97% for KuCoin, not sure what it is for Kraken). You should be setting stop losses that keep you from getting close to that.
- Market conditions wouldn’t prevent you from getting liquidated before/during a crash; quite the opposite actually. If you are asking if market conditions would prevent your sell orders (or buy orders if you’re short) from executing during periods of high volatility, the answer is: possible, but very unlikely if you are setting appropriate SLs, and even less likely if you are only trading BTC and ETH (which have very dense order books)
- Hackers probably aren’t much of an issue/risk with more reputable exchanges (I think Kraken is one of the largest, and presumably most secure, exchanges). Scammers and market manipulation are more of a concern in this space.
- Taxes. You’ll definitely have to do your research on this topic. Way too much to summarize here. One word of caution - just swapping one crypto for another (e.g., trading BTC for USDT) can trigger taxable gains; you don’t need to sell for USD to realize a gain/loss.
- Misleading information? Yes. Everywhere.