Margin trading is a method used in asset trading that uses funds provided by a third party.

Compared to regular trading accounts, margin accounts allow traders to access larger amounts of capital, thereby allowing them to increase the value of their positions.

Put simply, trading on margin amplifies trading results so that traders can make larger profits on successful trades. The margin trading is also used in the stock, commodity and cryptocurrency markets.

In traditional markets, borrowed funds are generally provided by an investment broker.

In cryptocurrency trading, however, the funds are made available by other traders, who earn interest based on the market demand for margin funds. Additionally, some cryptocurrency exchanges directly provide margin funds to their users.

HOW DOES MARGIN TRADING WORK?

When a position with margin is opened, the trader is required to commit a percentage of the total order value.

This initial investment is known as margin, and is closely related to the concept of leverage.

In other words, margin trading accounts are used to create leveraged trading, and leverage describes the ratio of borrowed funds to margin.

For example, to open a $ 100,000 position with a leverage of 10: 1, a trader would have to commit $ 10,000 of his equity.

Of course, different markets and trading platforms offer distinct rules and leverage ratios. In the stock market, for example, a common ratio is 2: 1, while forward contracts often have a leverage of 15: 1. As for Forex brokerage, margin trades often have a leverage ratio of 50: 1, but in some cases, ratios of 100: 1 and 200: 1 are used. In cryptocurrency markets, however, the ratios generally vary from 2: 1 to 100: 1, and the trading community often uses the terminology 'x' (2x, 5x, 10x, 50x and so on).

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Margin trading can be used to open long or short positions. While the position is open, the trader's assets act as collateral for the borrowed funds. It is essential to understand this aspect, as most brokers reserve the right to force the sale of these assets in the event that the market moves against their position (above or below a certain limit).

For example, if a trader opens a long leveraged position, the broker may make a margin call when the price falls significantly.

A margin call occurs when a trader is required to deposit multiple funds into their account to meet the minimum requirements for trading on margin. If the trader fails to do so, his funds are automatically liquidated to cover the losses.

Typically, this occurs when the total value of all assets in a margin account, also known as liquidation margin, falls below the exchange's or broker's total margin requirements.

ADVANTAGES AND DISADVANTAGES

The most obvious advantage of trading on margin is the fact that higher profits can result from the higher relative value of trading positions. In addition to this, trading on margin can be useful for diversification, as traders can open various positions with relatively small amounts of investment capital.

Finally, having a margin account can make it easier for traders to open positions quickly without having to move large sums of money between their accounts.

The downside of trading on margin, however, is the obvious disadvantage of increasing losses in the same way it can increase profits.

Unlike normal spot trading, trading on margin introduces the possibility of losses that exceed the trader's initial investment and, as such, is considered a high-risk trading method.

Depending on the extent of the leverage used in a trade, even a slight movement in the market price can cause considerable losses for traders. For this reason, it is important that investors who decide to use margin trading adopt the appropriate risk management strategies and use risk mitigation tools, such as stop-limit orders.

PLANNING TO TRADE ON MARGIN IN THE CRYPTOCURRENCY MARKETS

Due to the high levels of volatility typical of these markets, margin-using cryptocurrency traders should be especially careful. While hedging and risk management strategies can be useful, margin trading is definitely not suitable for beginners.

Being able to analyze charts, identify trends and determine entry and exit points will not eliminate the risks associated with trading on margin, but it could help you anticipate them and trade more effectively.

Therefore, before leveraging their operations in the cryptocurrency market, users are recommended to develop a deep understanding of technical analysis and gain extensive experience in spot trading. So it is adviceable that learn how to analyse charts before trading crypto margin.

WHAT ARE THE CRYPTO EXCHANGES THAT PROVIDES MARGIN TRADING

Let us take a look at the crypto exchanges that provides margin trading
BYBIT: Bybit is a crypto exchange that base on 4 pairs only i.e BTC/USD, XRP/USD, ETH/USD, and EOS/USD.
POLONIEX: poloniex trades altcoin
BINANCE: Binance permits its users to borrow funds in over 40 different cryptocurrencies
BITMEX: BitMEX platform permits its users to trade derivatives as an alternative to coins and also trade futures and perpetual contracts

LEVERAGE TRAIDING

Leverage is a tool that allows you to multiply your exposure on the market without committing additional capital . In investing, the amount required to open and hold a leveraged position is called margin .

Leverage is available on various financial products, including CFDs and forex. When a trader uses leverage, the broker will ask to invest only a fraction of the total position value, the rest will be lent by the broker. Profits and losses are calculated on the total amount of the position, so the final result of the trade could be greater than the initial one. Losses could exceed the initial deposit

PLANNING FOR TRADING IN LEVERAGED TOKENS

If trading in leverage token is new to you, it is quite advisable that you stick to spot trading because the chances of loosing your money are very high when trading in leverage token but if you are already experienced, fine, you can make use of leverage trading instead of the traditional leverage positions on digital exchange of assets.

WHAT ARE THE CRYPTO EXCHANGES THAT PROVIDE LEVERAGED TOKENS SERVICEs

BITMEX: Provides leverage for XBT (BTC), ETH, LTC, ADA, BCH, and XRP OKEX: Provides leverage for BTC, ETH, EOS, ETC, and LTC, DASH, QTUM, BSV, and NEO;
PRIME XBT: Provides leverage for assets, like BTC, ETH, EOS, XRP, and LTC
KRAKEN: Provides leverage for BTC , ETH and XRP

BITCOIN PAIR PRICE FORCAST FOR MONDAY 10TH MAY 2021

Conceptual price range for bitcoin pair on May 10th is 45000.00 to 68200.00.
Since we have achieved a high of closely 64800.00 in the month of April which was a pass, but the setback lower since then has proven harsh. Still, if the 55000.00 price could be touched and withstand values above, traders officially could begin to target the 57000.00 resistance level.

If this higher value that was traded last on the 19th April can be hit, it could set the table for investors who believe bullish momentum can be reinforced in full and that a test of the 60000.00 value is achievable. If the value of BTC/USD can find a rather consistent trading above the 60000.00 juncture for a long time, then it is sure to experience high records.

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