Advantages and Disadvantages of Bitcoin Margin Trading
Please reaffirm again, Margin Trading is a very good, but dangerous.
Here are the Advantages and Disadvantages of Margin Trading
Increase the amount you can use: You only have $ 2500 and have already bought bitcoin. Unfortunately, then Bitcoin reduced to $ 1800, you see this is a great price, but no money. Margin trading will help you solve that problem. Transferring 1 Bitcoin to your Margin account will give you enough money to buy 2.5 BTC (Poloniex) and 3.3 BTC (Bitfinex). And then Bitcoin went back to $ 2000, and you made a profit of $ 1800, though there was no money at that time.
Make a profit when the market is down: With regular sales, only low-priced offers sell for a profit, but you can not make money when prices fall. Margin gives you one more chance. Feel the BTC is at $ 4000 is very high, you transfer $ 2500 to your Margin account, your authorized amount up to $ 8250. This money can be used to buy BTC if it is expected to increase, or BTC loan to sell if the price drops. You can borrow 2BTC and sell it at $ 4000, after the BTC drops to $ 3500, you can buy two BTCs for $ 3500 to return the previously borrowed BTC. So the difference you get is $ 1000.
Risk of losing money
The right valuation makes you take advantage of the margins quickly, but the wrong assessment makes you pay very expensive, because the losses and profits are multiplied by the ratio of money. you play. Also, for regular trading, when buying a BTC for $ 2500, the price is down to $ 1500 more you can still wait months to increase it again. But if you have the maximum margin of your money, when it comes to liquidation, your BTC will be sold and you will not have the opportunity to wait for it to rise. It will be very painful if it goes up in the next few hours, but sometimes it's better luck getting the armor, early liquidation, you still have the funds to fight. After pumping armor, assuming the price continues to fall, your losses will increase.
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