Recently, I saw someone ask what leveraged trading is all about, and it reminded me of some stories I’d like to share.

First, let’s start with the most basic concept. If Bitcoin is $50,000 each, and you buy one with $50,000, that’s a regular trade. But leveraged trading is different—you only need to put up 10%, which is $5,000, and I cover the remaining 90%. That’s tenfold leverage. Of course, the $45,000 I cover isn’t a gift; it’s a loan to you, and you’ll have to pay me back later.

At this point, if Bitcoin rises to $55,000, a 10% increase, you sell and pay me back $45,000, leaving you with a net profit of $10k. That’s equivalent to doubling your $5,000 principal. But on the flip side, if Bitcoin drops to $45,000—just a 10% decline—under tenfold leverage, your $5,000 is wiped out. Even worse, the remaining value is only enough to pay back my loan, and I definitely won’t let you keep holding on. Your money can hold on, but what right do I have to gamble with yours? I can directly sell your coins and take my $45,000. If I sell slowly and Bitcoin drops to $44,000, not only do you lose everything, but you also owe me $1,000. That $1,000 is a debt that must be repaid—that’s what we call a liquidation.

The only way to avoid liquidation is to add margin. For example, you deposit an additional $5,000 into your account, so your cash plus the value of Bitcoin exceeds $45,000 again, and I can rest assured.

But here, I want to tell a more interesting story. There used to be many fake trading platforms domestically. Unlike those scams that just fake data, these exchanges’ data are all real, but they can still trick investors into losing everything.

The method is actually very simple. For example, a product with tenfold leverage—what exactly it is doesn’t matter; let’s just say it’s trading some commodity. The current price is $50,000 per unit, and many traders hold long and short positions at this price. The exchange knows all investors’ positions, their account funds, and actual leverage ratios.

At this point, if the exchange teams up with a few powerful market makers late at night, ready with a lot