Even though I have traded on Binance, I have never used Binance Futures and I have never used leveraging.
What concerns me is the risk. But what I find most worrisome, is I have heard that with leveraging, you can end up losing more than your capital. What do I mean by this?
What I mean is, lets say I have $1000 on Binance balance. I use leveraging and I lose $1200, that will mean my balance is -$200. Yes minus!
Which means I would OWE $200, and will have to pay that unless I want legal action taken against me.
Please correct me if I am wrong as I would love to hear that.
Otherwise, leveraging is very dangerous. You could endup losing your house!
Is it possible to lose more than the capital when using leveraging?
No it's not possible to lose more than your capital no matter how much leverage you take out, even if your leverage is 100x, which means you have just $1000 but you are buying and selling cryptos worth $100,000. The limit here actually is set by the liquidation point, if you buy BTC at $45000 for example, you will be given a liquidation point based on your leverage, let's you take 10x leverage and your liquidation point is $42000. This would mean that if price of BTC goes below $42k your whole capital will be gone. You won't owe anyone anything but even if the price goes back up again you will not be given your position back which means exchange would sell the trade on your behalf, this liquidation point is basically set in such a way that only your capital is in the trading limit.