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Jack

Margin Trading

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Hello, Have a good day! I am a student of economics, and I have a plan for building a career in Forex. I have a great interest in cryptocurrency. But sometimes I become confused with some terms because I am new in this industry. Can anyone define margin trading in terms of cryptocurrency?

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Hi Jack,
To trade in a cryptocurrency, you have several options at your disposal. Among them, trading with leverage, margin trading, or shorting Bitcoin, are all different faces of the same coin - leverage trading. Nuances arise from the interchangeability they are defined by.
Volatility is a hallmark of the cryptocurrency market. Price fluctuations traits of cryptocurrency markets allow proficient traders to profit from both bull or bear markets with Bitcoin marginal trading.
Cryptocurrency margin trading, lets you borrow capital so that you have increased purchasing power and open positions well above your actual account balance. It’s a practice letting you gain more exposure to an asset, by borrowing capital from fellow exchange traders, or the exchange itself.
This trade form contrasts a regular trade, where you would use your own capital for trading, whereas marginal trading lets you multiply whichever capital amount you can trade with. Supposing, you start your trade with a 100x leverage. This increases your potential profits and exposure by 100 times.
The downside is that dabbling in cryptocurrency margin trade greatly increases risks. Fortunately, a higher margin trade risk is not proportional to leverage. However, losses may exceed the assets you have committed.

Edited by penninah

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