From 14a859c190a1fa8b89a13b8d756127546b822ff5 Mon Sep 17 00:00:00 2001
From: Matthias <xmatthias@outlook.com>
Date: Thu, 16 Jun 2022 19:50:13 +0200
Subject: [PATCH] Improve some documentation around futures / leverage

---
 docs/leverage.md           | 15 ++++++++++++++-
 docs/stoploss.md           | 13 +++++++++++++
 docs/strategy-callbacks.md |  3 +++
 3 files changed, 30 insertions(+), 1 deletion(-)

diff --git a/docs/leverage.md b/docs/leverage.md
index 2ee6f8444..491e6eda0 100644
--- a/docs/leverage.md
+++ b/docs/leverage.md
@@ -64,7 +64,10 @@ You will also have to pick a "margin mode" (explanation below) - with freqtrade
 
 ### Margin mode
 
-The possible values are: `isolated`, or `cross`(*currently unavailable*)
+On top of `trading_mode` - you will also have to configure your `margin_mode`.
+While freqtrade currently only supports one margin mode, this will change, and by configuring it now you're all set for future updates.
+
+The possible values are: `isolated`, or `cross`(*currently unavailable*).
 
 #### Isolated margin mode
 
@@ -82,6 +85,16 @@ One account is used to share collateral between markets (trading pairs). Margin
 "margin_mode": "cross"
 ```
 
+## Set leverage to use
+
+Different strategies and risk profiles will require different levels of leverage.
+While you could configure one static leverage value - freqtrade offers you the flexibility to adjust this via [strategy leverage callback](strategy-callbacks.md#leverage-callback) - which allows you to use different leverages by pair, or based on some other factor benefitting your strategy result.
+
+If not implemented, leverage defaults to 1x (no leverage).
+
+!!! Warning
+    Higher leverage also equals higher risk - be sure you fully understand the implications of using leverage!
+
 ## Understand `liquidation_buffer`
 
 *Defaults to `0.05`*
diff --git a/docs/stoploss.md b/docs/stoploss.md
index 573fdbd6c..83f787947 100644
--- a/docs/stoploss.md
+++ b/docs/stoploss.md
@@ -191,6 +191,19 @@ For example, simplified math:
 !!! Tip
     Make sure to have this value (`trailing_stop_positive_offset`) lower than minimal ROI, otherwise minimal ROI will apply first and sell the trade.
 
+## Stoploss and Leverage
+
+Stoploss should be thought of as "risk on this trade" - so a stoploss of 10% on a 100$ trade means you are willing to lose 10$ (10%) on this trade - which would trigger if the price moves 10% to the downside.
+
+When using leverage, the same principle is applied - with stoploss defining the risk on the trade (the amount you are willing to lose).
+
+Therefore, a stoploss of 10% on a 10x trade would trigger on a 1% price move.
+If your stake amount (own capital) was 100$ - this trade would be 1000$ at 10x (after leverage).
+If price moves 1% - you've lost 10$ of your own capital - therfore stoploss will trigger in this case.
+
+Make sure to be aware of this, and avoid using too tight stoploss (at 10x leverage, 10% risk may be too little to allow the trade to "breath" a little).
+
+
 ## Changing stoploss on open trades
 
 A stoploss on an open trade can be changed by changing the value in the configuration or strategy and use the `/reload_config` command (alternatively, completely stopping and restarting the bot also works).
diff --git a/docs/strategy-callbacks.md b/docs/strategy-callbacks.md
index 410641f44..beffba56b 100644
--- a/docs/strategy-callbacks.md
+++ b/docs/strategy-callbacks.md
@@ -823,3 +823,6 @@ class AwesomeStrategy(IStrategy):
         """
         return 1.0
 ```
+
+All profit calculations include leverage. Stoploss / ROI also include leverage in their calculation.
+Defining a stoploss of 10% at 10x leverage would trigger the stoploss with a 1% move to the downside.