Recent Study Highlights the Thin Line Between Safe and Risky Leverage in Crypto Trading

Zurich, Switzerland, September 2, 2024 – Outcome Labs, a trailblazer in the decentralized derivatives sphere, is excited to present its latest remarkable analysis regarding the crypto derivatives liquidation crisis. Driven by the ethos “Do Not Get Rekt,” this study exposes the frequently ignored hazards of leveraged crypto trading, with the goal of equipping traders with essential knowledge to confidently maneuver through these choppy waters.

In an unexpected twist, Outcome Labs has discovered a major void in prior research: there has yet to be a thorough study focused on the likelihood of being REKT when engaging in leveraged trading. Although leveraged trading is often perceived as an expedited route to significant profits, it harbors the looming risk of total capital loss—a danger that many traders tend to overlook. To uncover the truth, the team at Outcome Labs meticulously analyzed eight years of daily Bitcoin price movements. The findings were eye-opening: as leverage and holding periods extend, the likelihood of liquidation skyrockets, even for traders who think they are being cautious with short-term strategies.

According to Pete Harrigan, the Founder of Outcome Trading, 'Traders using 25X leverage encounter a 25% chance of losing their entire investment within just 24 hours.' This alarming statistic emphasizes the urgent need for robust risk management tactics in the realm of crypto trading.

Harrigan elaborated, stating, 'When it comes to a string of 50 trades, the risk of losing everything dramatically climbs once leverage exceeds 5x.' Such insights are crucial for both newcomers and experienced traders, stressing that the odds often favor defeat for those who engage in high-leverage trading without a firm understanding of the associated risks.

A significant revelation from the research conducted by Outcome Labs challenges a common belief among traders: that engaging in trades over shorter time spans can effectively lower risk. While some defend the notion that quick trades can protect against large losses, the reality presents a different picture. The study reveals that liquidations still represent a considerable risk, even over shorter periods. The swift fluctuations in the crypto market can eliminate positions within moments, no matter how long they've been held.

Harrigan highlighted this point by referencing data sourced from @BXREKT, which documented around 270,000 liquidations over a four-year time frame. 'The statistics clearly indicate that liquidations are quite prevalent, not an isolated occurrence for traders,' Harrigan noted, adding, 'They often happen when traders are least prepared for them.'

Comprehensive Insights for Traders

Outcome Labs’ thorough analysis examines various holding durations, trading methodologies, and an extensive array of crypto assets. It provides traders essential information to help avoid disastrous losses while navigating the complexities that come with leveraged trading. Their findings also illustrate that risk escalates significantly not just with increased leverage but also with extended holding times, independent of market conditions. This underscores the necessity for sophisticated risk management tools and strategies, which are vital for anyone participating in leveraged crypto trading.

For those aspiring to create a viable trading strategy, the research findings are unambiguous: a solid grasp of leverage risks is crucial. Outcome Trading is committed to equipping traders with the tools and resources necessary to trade smarter, safer, and more profitably.

To delve deeper into the detailed findings, explore the full article here: Crawling from the REKage: The Odds of Bankruptcy in Leveraged Trading by Peter Harrigan, Aug 2024, Outcome Trading

About Outcome Trading

OutcomeTrading.io is a prominent Web3 decentralized autonomous organization (DAO) dedicated to empowering users to craft and implement safe yet potent derivatives outcomes. With an emphasis on a secure and user-friendly trading environment, Outcome Trading helps users reach their financial targets while minimizing liquidation risks. By focusing on cutting-edge solutions like embedded intelligence and sophisticated trading tools, Outcome Trading is transforming the landscape of crypto derivatives.

Media Contact:
Founder: Peter Harrigan
Website: OutcomeTrading.io
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