Bitpanda Leverage

FAQ

• What is Bitpanda Leverage?

  Bitpanda Leverage is a CFD, or Contract for Differences. This derivative product acts as an agreement between an investor and a broker, in this case, Bitpanda. CFDs enable investors to potentially profit from price movement of a specified cryptocurrency without owning the underlying asset.

• What does long and short leverage mean?

  Long leverage means you can open a 2*x Long position on the top crypto, the performance of which is double* the underlying crypto asset. While short leverage means the performance of your position is the inverse of the underlying crypto asset. For example, if Bitcoin price goes up 10%, the price of Bitcoin/EUR 1x Short will decrease 10% and the price of Bitcoin/EUR 2x Long will go up to 20%*. Put simply, this means you can open a short position on an underlying cryptocurrency if you think crypto price could go down, or a long position if you expect prices to rise. Please note: Short Leverage is now visible in the app and will be made available for all customers to trade in the coming weeks.

• What is re-leveraging?

  In regular leverage trading, you borrow from the exchange to trade with, and if the price drops too much, they can take your collateral and sell it to cover the loss. This is a liquidation. With Bitpanda Leverage, we re-leverage to maintain the target leverage ratio of 1.9x (for long positions) on your behalf - at least once per day - to ensure you do not lose more than you invested.. Also, we will never ask you to provide any additional collateral.

• What are the risks of CFD leverage trading and how can the risks be mitigated?

  CFDs can provide access to an underlying asset at a lower cost and offer the option to go long or short, but they also come with significant risk of losses. Trading CFDs on leverage means you can participate in the losses/gains of an underlying asset for a fraction of that underlying asset's value as initial investment. The use of leverage magnifies the size of the trade, which means that your potential gain and your potential loss are equally magnified. You should closely monitor all the open positions to manage the risk of large losses. 

  First, you should always do your own research and not invest money in Bitpanda Leverage that you cannot afford to lose. 

  Bitpanda Leverage contains a margin close out control with a trigger of 50% of the initial margin. This means that a position will be automatically closed if a 50% loss has been incurred. A negative balance control ensures that potential losses of your position are capped at the original amount you invested into Bitpanda Leverage.

• Which fees apply?
  • Commission fees: we don’t charge for leverage trading
  • Trading fees: Buy fee for leverage positions is 0%. A return fee of 1% is charged when closing leverage positions
  • Overnight fees: A daily fee of 0.1% on the leveraged amount will be charged.
• What if I have more questions?

  We encourage you to read our Helpdesk article for further information.

• How to assess your currency risk?

  If the default currency you have chosen in your wallet settings is different to EUR, your returns will be calculated in EUR and then converted to your chosen currency using a live exchange rate. This means that you are exposed to the risk of changes in the exchange rate between EUR and your chosen currency.

  For example, if you invest 100 USD and the EUR/USD exchange rate increases by 10%, your returns in USD will be 10% higher. However, if the EUR/USD exchange rate decreases by 10%, your returns in USD will be 10% lower.

  You should carefully consider the risks of exchange rate volatility before investing in this product.