Leveraged up, leveraged down

bic_artwork_create_BTCLeverage has benefits on the way up, but it has drawdowns on the way down.

Exchanges need to pay the winners, so they HAVE to go after the losers. If you lose on derivatives, you will get sued, and your house and savings are theirs in most cases. There is little you can do to escape this.

That’s why there are clearers on regulated exchange. They protect the winnings of the winners by guaranteeing payments from all participants. If your crypto exchange has no clearer (as is often the case), then the exchange is not safe. You may not get your expected winnings. You carry high counterparty risk.

 

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Written by Gontran de Quillacq

Gontran de Quillacq is an expert witness and a legal consultant. He is a recognized authority in options, trading, derivatives, structured products, portfolio management, hedge funds, mathematical finance, quantitative investment, strategy research and financial markets in general.

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