Leverage trading. It can be the most profitable, if you're the right trader. However, it carries a lot of risk.
Before you can borrow funds and start trading with leverage, you need to deposit funds into your trading account. The initial capital you provide is what we call the collateral. The collateral required depends on the leverage you use and the total value of the position you want to open .with a 10x leverage. The margin required would be 1/10 of $1,000, meaning that you need to have $100 in your account as collateral for the borrowed funds.
However, if the BTC price drops 20%, your position would be down $2,000. Since your initial capital is only $1,000, a 20% drop would cause a liquidation . In fact, you could get liquidated even if the market only drops 10%. The exact liquidation value will depend on the exchange you are using. Assuming the current BTC price is $40,000, you borrowed 0.25 BTC and sold it. If the BTC price drops 20% , you can buy back 0.25 BTC with just $8,000. This would give you a net profit of $2,000 .