J
johndravid
Guest
A margin trading exchange is a type of cryptocurrency trading platform that allows users to borrow money from the exchange or broker to trade larger amounts than they own, thereby increasing their purchasing power.
How It Works:
Leverage:
Traders use leverage (like 2x, 5x, or even 100x) to open larger positions. Higher leverage results in both greater profit potential and greater risk.
For example, with 5x leverage, $100 becomes $500 in buying power.
Borrowed Funds:
The exchange lends the extra funds needed for the leveraged trade.
Collateral:
Traders must deposit collateral to secure the borrowed Capital. If the trade goes against them, the platform may liquidate the position to cover losses.
Profit or Loss:
If the market moves in their favour, traders keep the profits after repaying the borrowed funds and fees. If not, they lose their margin or more.
How It Works:
Leverage:
Traders use leverage (like 2x, 5x, or even 100x) to open larger positions. Higher leverage results in both greater profit potential and greater risk.
For example, with 5x leverage, $100 becomes $500 in buying power.
Borrowed Funds:
The exchange lends the extra funds needed for the leveraged trade.
Collateral:
Traders must deposit collateral to secure the borrowed Capital. If the trade goes against them, the platform may liquidate the position to cover losses.
Profit or Loss:
If the market moves in their favour, traders keep the profits after repaying the borrowed funds and fees. If not, they lose their margin or more.
