Margin Trading

What is Margin Trading?

Margin trading is the practice of funding a deal with borrowed money. The primary distinction between margin trading and spot trading is that the former enables the trader to open a position without having to cover the entire cost out of their pocket.

If a trader is trading on margin and their position swings against them and they do not have enough collateral to cover the losses, they could be liquidated. Margin trading can give investors access to significant leverage, which increases both the potential for gains and losses. The value of cryptocurrencies fluctuates greatly. As a result, margin traders may be more vulnerable to losses than they would be if they were trading in a market with lower volatility.