Leveraged tokens pros and cons (advantages and risks)

Leveraged tokens pros and cons advantages and risks : Anyone who considers trading leveraged tokens like ETHBULL, ETHBEAR, EOSBULL, EOSBEAR, XRPBULL,XRPBEAR would also wonder about pros and cons, in other words, advantages and risks of leveraged tokens. Here are what you should expect when you invest in  leveraged tokens.

Leveraged tokens pros and cons advantages and risks :

Pros (Advantages)

  • If you make right decision on the price movement direction of the base coin, you can make profit by more than three times by percentage. For example, when Ethereum price goes up by %10, ETHBULL price would go up by %30.
  • When compared to margin trading and futures, it is almost impossible for leveraged token positions to get liquidated.

Cons (Risks)

  • Traders will always have the risk of heavy loss by three times in percentage if they make wrong decision. For example, when Ethereum price goes up by %10, ETHBEAR price goes down by %30.
  • Leveraged token prices would not rise to the level at the moment the position was opened even if the price of the base coin rises to the same level . For example, when ETHBEAR position is opened at 20 USD when Ethereum price is 250 USD, in case of a fall in Ethereum price, the ETHBEAR price would not rise to 20 USD even if Ethereum price rise to 250 USD.
About Eda Candan 257 Articles
Journalist, Reporter based in Turkey

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