Ever wondered what margin trading is, how to make money from it, or even how to do it? Do you even know what margin trading is? Don’t worry, we’ve got you covered ?
What is Margin Trading?
“Margin trading is a way of trading by borrowing assets from traders or exchanges. It allows users to use a small amount of initial capital to leverage their positions for maximizing profit on spot trading.” — Simply put by OKEx
Still don’t understand? ?
Margin trading is a method of trading assets using funds provided by a third party. When compared to regular trading accounts, margin accounts allow you as a trader to access greater sums of capital, allowing you to leverage your positions. Make sense? ?
Essentially, margin trading amplifies trading results so that you’re able to realize larger profits on successful trades. This ability to expand trading results makes margin trading especially popular in low-volatility markets.
In traditional markets, the borrowed funds are usually provided by an investment broker. In cryptocurrency trading, however, funds are often provided by other traders, who earn interest based on market demand for margin funds. Although less common, some cryptocurrency exchanges also provide margin funds to their users.
How does Margin Trading work?
When a margin trade is initiated, you will be required to commit a percentage of the total order value. This initial investment is known as the margin, and it is closely related to the concept of leverage. In other words, margin trading accounts are used to create leveraged trading, and the leverage describes the ratio of borrowed funds to the margin. For example, to open a $100,000 trade at a leverage of 10:1, you would need to commit $10,000 of your capital.
Still, confused? OKEx has an article on it ?
What’s in it for you?
Margin Trading carries a lot of advantages. But the most obvious advantage is the fact that it can result in larger profits due to the greater relative value of the trading positions. Other than that, margin trading can be useful for diversification, since you can open several positions with relatively small amounts of investment capital. Finally, having a margin account may make it easier for you to open positions quickly without having to shift large sums of money to your accounts. ?
Where do I start?
Margin trading is a useful tool if you’re looking to amplify profits of your successful trades. If used properly, the leveraged trading provided by margin accounts can aid in both profitability and portfolio diversification. ?
We recommend starting with OKEx ? It’s easy. Here’s how:
Step 1 — Register on ChainEX
Step 2 — Verify and fund your ChainEX account
Step 3 — Buy Bitcoin on ChainEX
Step 4 — Register on OKEx using this link and start trading!
So what’s next?
Now? Now you wait ? Something huge is coming soon!
Founded in 2018, ChainEX provides South Africans with a secure, user-friendly platform to buy, sell and trade various cryptocurrencies, including Bitcoin and Ethereum among other cryptos, with the South African Rand as the default fiat currency.
OKEx, meanwhile, is a world-leading cryptocurrency exchange, providing advanced financial services to traders globally by using blockchain technology. With just over 20 million users in over 100 countries, OKEx has nearly US$1.5 billion daily trading volume.
Get to know ChainEX & OKEx
All content and topics covered are mere opinions and do not constitute investment advice. Trading and investing in Bitcoin carries a high level of risk. We do not assume any responsibility for actions taken upon reading any of our articles. ChainEX is not a financial advisory firm, nor are we an investment manager.