Leveraged trading on Nami Futures is a form of trading where you use leverage to purchase an investment of a larger amount than your equity. So what are the most frequently asked questions when users experience Nami Futures on VNDC Wallet? You will have the chance to objectively evaluate the effectiveness of this method through some basic knowledge mentioned below.
Making a larger investment with a low cost of capital
Given that you have 1,000,000 VNDC (0.0038 BTC), but you want to buy 100 times more (0.38 BTC) due to the expectation that the price will increase by 10%. Now, if you choose leverage x100 on Nami Futures, you can make profit of 10,000,000 VNDC (0.038 BTC).
Making a profit when the market is going down
You expect that the ETH/USD pair will sink by 10%, which is your chance to engage in arbitrage, however, the problem is you do not own any ETH but only 1,000,000 VNDC (equivalent to 0.11 ETH).
Nami Futures will allow you to place a maximum sell order of 11 ETH from 1,000,000 VNDC you hold until the price declines to the level you expect to be able to close the 11 ETH sell order with a profit of 10,000,000 VNDC (equivalent to 1.1 ETH).
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Managing the risks during market volatility
Suppose that you have 1 BTC ($11,000) in your VNDC Wallet account, however, you worry that BTC may have an intraday drop with a margin up to 5% because you are confused about whether the price will decrease and you still need hedging.
You can use Nami Futures with a margin of 0.01 BTC (equivalent to $100) in order to place a BTC sell order on Nami Futures with a volume of 1 BTC after using x100 leverage. If the price drops by 10% (to approx. $10,000), you will earn an additional 0.1 BTC. Consequently, this time you will have 1.1 BTC (equivalent to $11,000). In the case of a 10% price increase to approximately $12,000, you will have 0.99 BTC equivalent to $11,880.
Basically, you can partially control the risk when the price is in a bearish trend. This is a strategy that professional financial institutions often utilize to hedge.
No forms of trading could guarantee 100% efficiency, and leveraged trading on Nami Futures is not an exception. However, investors should study all methods and may then consider whether Nami Futures, with an acceptable level of risk and margin, is suitable for their requirements.