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Bitcoin and Altoquin Margin Trading

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Marginal trade in bitcoins and altokines
For traders with limited cryptocurrency resources (bitcoins or other coins), there is the possibility of margin trading, which allows an increase in investment. In fact, your investment is growing, although you do not even have such assets. It is important to note that margin trading cannot be recommended to everyone and is associated with very high risks.

Let's start: what is margin trading?
Margin trading allows a trader to open positions using “leverage” - borrowed capital. For example, we opened a margin position with a 2X leverage. The price of our underlying assets increased by 10%. Thanks to the use of 2X leverage, this position will bring us 20% profit. Standard deals are made with a leverage of 1: 1.

Margin trading is possible due to the existence of a credit market. Lenders provide traders with loans so that they can buy more coins, and lenders receive their percentage of the loan amount. On some exchanges, such as Poloniex, loans are provided by users, and on others - by the exchange itself. For example, on the Poloniex exchange, any user can borrow his bitcoins or altcoins and get a percentage of the loan amount. The main disadvantage is that these coins should be in the exchange wallet, which is far from security, like storage in a cold wallet.

Cost and risks of margin trading
As already mentioned, the cost of the marginal position includes interest paid to the exchange or other users for borrowed coins, as well as a fee for opening an exchange position.

At the same time, you can not only earn more. This is the amount of our funds invested in an open position. This level is called the liquidation value. If you lose your money, you’re not getting any money.

Example: When it comes to the position of a standard trademark with a 1: 1 shoulder, it reaches zero. With the increase of the size of the shoulder, the liquidation will approach the purchase price. For example, bitkoyn costs $ 1,000, and we bought one bitkoyn with a shoulder 2: 1. The cost of our position is $ 1,000, and we borrowed another $ 1,000. Since we’re losing, we’re losing exactly $ 1000.

Marginal trading can be carried out.

Recommendations for margin
Clear risk management rules. It can be completely lost. Fixing profits or cutting losses.

Be attentive - Crypto-currencies are considered extremely volatile assets. Margin trading in crypto-currencies Therefore, try to use your shoulder to open short-term positions. In addition, although day commissions are negligible, considerable amounts can accumulate over a long period.


Sharp movements - in cryptocurrencies, there are sometimes sharp fluctuations in both directions. The risk is that such a drawdown can reach the level of liquidation. This can happen if a fairly large leverage is used, and the resale value is relatively close. But you can benefit from such sudden movements by setting target levels for closing positions in the hope that in case of such fluctuations the price will reach your goal before you roll back. As a result, you will receive a profit.

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