The larger the order, the higher the potential profit. Does it mean that you cannot start increasing income until you have enough assets? The answer is no. The margin trading tool allows making large transactions without huge amounts on balance.
Besides, it requires trading skills and market understanding. In the article, we offer to discuss this method and its opportunities at the best crypto exchange for day trading.
In simple words, margin trading is a tool that allows the selling or buying crypto assets. Thus, users can earn more using borrowed funds. But before starting trading, they have to make sure a required margin is on their balance.
While margin trading can help earn, it’s impossible to use this tool without applying such instruments as stop-limit orders. On the contrary, small shifts in the market can be costly for the trader. Thus, when one succeeds with high leverage, the other fails.
You replenish a share of the total order value from your balance. Traders use margin to create leverage. In turn, leverage gives enlarged purchasing power, allowing users to open more prominent positions than they would be able to in case to use only their own money.
For instance, you want to invest $2000 in Bitcoin with 5x leverage. The required margin will be 1/5 of $2000. So, it means you need to have $400 on your balance.
If you use 20х leverage, you need to replenish only $100. Notice that high leverage supposes high liquidation risks.
Due to the volatility of cryptocurrencies, margin trading has become an overall strategy to open long or short positions, allowing people to benefit from significant and prompt fluctuations.
Thanks to it, you can buy assets if you think they will rise in value (and profit from the rising prices) or sell them if you think they are going down (making money on the price decreasing).
Margin trading allows trade sums that dramatically exceed your own money. It is a new level compared to spot trading, as it greatly multiplies profits if the proper position has been opened. By choosing our safest crypto exchange, you get access to:
Margin trading provides traders with opportunities not accessible in other forms of trading. It can be a fun and beneficial activity when it is done consciously.
Expand your trading horizons and increase your income, regardless of the crypto exchange rate movements!
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