What is margin trading?

[Consignee 2395]

I have seen people using the term Margin trading in various places, probably have seen it in couple of exchanges too, can't remember the name. Anyway, can someone simply explain what is margin trading? I have no idea about it.

[xBDT Script 4371]

watch this video on the page

Page: https://www.investopedia.com/terms/m/margin.asp

Quote

• Margin refers to money borrowed from a brokerage to trade securities.
• Margin trading therefore refers to the practice of using borrowed funds from a broker to trade a financial asset, which forms the collateral for the loan from the broker.
• A margin account is a standard brokerage account in which an investor is allowed to use the current cash or securities in their account as collateral for a loan.
• The collateralized loan comes with a periodic interest rate that the investor must repay to the broker.
• Leverage conferred by margin will tend to amplify both gains and losses. In the event of a loss, a margin call may require your broker to liquidate securities without prior consent.

The article and the video explained it very well. Have a read.

[hexwin 4931]

Have you used any leverage marging trading exchanges so far and what do you prefer?

It is very risky and always should be careful when using them.

Some people use Bitmex or Kumex and Binance for that.

I am using  Bybit and if you want to try it and get free bonus you can do it with my reff link: https://www.bybit.com/

Thanks 👍

 

 

Edited September 29, 2019 by hexwin

[cryptotalker 611]

I used bybit, which is a nice crypto stock market. With bitmex trial account you can learn margin trade. margin trade is really very dangerous. you can lose all your money at once. Please be careful.

[BullRunBit 2773]

Just now, cryptotalker said:

I used bybit, which is a nice crypto stock market. With bitmex trial account you can learn margin trade. margin trade is really very dangerous. you can lose all your money at once. Please be careful.

Yes it's risky but why you dont write about stop loss?

Margin or Leverage trading is risky but have great opportunities, on regural trading you earn 10% but on margin (example on 10x) you will earn 100% but of course with liquidation price (that is risky part).

This is the video where you can find all about margin trading (on Bitmex):

https://www.youtube.com/watch?v=xFjedID1wnc&t=497s

I have a little experience with maring trading but it didn't turn out best, I lose on this (last one) drop I buy long on around 8200$ and then BTC drop below 8k and my liquidation price was around 8k (I putt 50x 😀).

My suggestion is to learn and dont start without plan.

[cryptotalker 611]

7 minutes ago, BullRunBit said:

Yes it's risky but why you dont write about stop loss?

Margin or Leverage trading is risky but have great opportunities, on regural trading you earn 10% but on margin (example on 10x) you will earn 100% but of course with liquidation price (that is risky part).

This is the video where you can find all about margin trading (on Bitmex):

https://www.youtube.com/watch?v=xFjedID1wnc&t=497s

I have a little experience with maring trading but it didn't turn out best, I lose on this (last one) drop I buy long on around 8200$ and then BTC drop below 8k and my liquidation price was around 8k (I putt 50x 😀).

My suggestion is to learn and dont start without plan.

You are right to the end, stop loss saves lives. If you do not have parachutes, it is not wise to jump off the plane. 😉

High leverage also poses great risk in high volatile markets like crypto currency. max. 10-20x ideal

[BullRunBit 2773]

Just now, cryptotalker said:

You are right to the end, stop loss saves lives. If you do not have parachutes, it is not wise to jump off the plane. 😉

High leverage also poses great risk in high volatile markets like crypto currency. max. 10-20x ideal

Big different between regural and margin trading is on regural trading price can not go down to 0 but on margin trading if you dont use stop loss function easy can go down to 0 😀

I have one picture to share from last BTC drop how much people lose on Bitmex on margin trading (on long)

[Bills 583]

I think that the maximum risk that can be taken in margin is 25x, it seems to me that higher risks liquidate them very immediately. Normally the King for Trading in this way is Bitmex, there are incredible settlements at every moment that the opportunity exists.

[lev 91]

To put it simple, you can borrow the coin from exchange to buy or sell.

For example, you have 100 USDT and you know BTC price is about to rising in short time, you will be able to buy BTC worth 150 USDT (with 100 USDT and borrow 50 USDT from exchange) now, and sell the BTC later when the price of BTC rising.

Hope you catch it.

[Consignee 2395]

2 hours ago, lev said:

To put it simple, you can borrow the coin from exchange to buy or sell.

For example, you have 100 USDT and you know BTC price is about to rising in short time, you will be able to buy BTC worth 150 USDT (with 100 USDT and borrow 50 USDT from exchange) now, and sell the BTC later when the price of BTC rising.

Hope you catch it.

It was very simple explanation, thank you mate. I never knew about that. What if BTC balance get decreased and I could not pay the borrowed amount, no such plan though  just curious how this thing goes on.

[Pa2dara4 104]

2 hours ago, lev said:

To put it simple, you can borrow the coin from exchange to buy or sell.

For example, you have 100 USDT and you know BTC price is about to rising in short time, you will be able to buy BTC worth 150 USDT (with 100 USDT and borrow 50 USDT from exchange) now, and sell the BTC later when the price of BTC rising.

Hope you catch it.

That's the simple explanation possible, you can trade with margin on bitmax although I'll advice you don't jump right into it because you can lose very easily. I heard Binance exchange too, has introduced trading with margin but since I haven't used their platform in a very long while, I can't tell you much about trading with them.

[Frodo1993 0]

It would only be good if the exchange is going to be active because of their promise for their token or coin holder.But I think it would be hard for them because they already have so many competative company that is already known in the industry and already have so many traders.

[Loser1970 0]

I thought that you have forgotten the meant of legal tender.

[jcarlo 206]

On 9/29/2019 at 1:35 PM, Consignee said:

I have seen people using the term Margin trading in various places, probably have seen it in couple of exchanges too, can't remember the name. Anyway, can someone simply explain what is margin trading? I have no idea about it.

Margin trading is like a loan so that we can trade more than we have. We can trade $ 100 with only $ 50 capital if we use leverage 100. It's like a double-edged knife, profitable if we can understand market movements but also detrimental because fluctuating market movements can make our capital disappear in an instant

[xprince1996 865]

Crypto margin trading is a highly risky type of trading compared to normal trading because on margin you can choose the leverage you want and the high the leverage the higher the risk.