In order to cryptocurrency trading margin, the very first thing you must consider is having an exchange account. A huge number of investors is also attracted towards cryptocurrency since the market blossomed in 2017.
Especially, when it comes to use Margin/leverage to trade cryptocurrency; there are plenty of options that you can choose from and get the best for you. But on Phemex it is now absolutely easy to trade these instruments using up to 100X leverage/margin.
Phemex is a cryptocurrency derivatives exchange which offers Bitcoin and USD settled perpetual contracts of BTC, ETH, XRP, LTC, EOS, with up to 100X leverage. It is an innovational, easy to use, professional, trustworthy and one of the safest exchanges in the market.
Secondly, it does not matter whether you are trading simply or you are using margin; you should familiarize yourself with the consequences you’re about to face. Consider your finances because stepping straight into the market you’re not aware of could be extremely dangerous and may cost you a lot of money. So, it is always better to practice before you trade real money. You can use a demo account to practice or try paper trading.
What is a margin?
A margin is simply a term widely used in stocks trading but it’s also being used in cryptocurrency world since 2017. Buying margin basically means that you are borrowing money from an exchange/broker to buy a financial instrument. It is a loan from your exchange that you can use to buy even more units of any asset than you’d normally be able to.
What is margin trading?
Margin trading is not typically designed for a specific type of person. It may be right for any investor who is looking for additional leverage in their investment.
For example, a person wants to buy 100 shares of a “Ethereum” at $100 per share. But he only has $5,000 investable cash available. This way, in a margin account one may use his $5,000 in cash and borrow the other $5,000 from the exchange to make the purchase. But everything has its pros and cons; as margin may provide a sudden benefit, on the other hand it may also cause losses with the same speed.
Which means if someone has bought 100 shares of ETH at a price of $100 per share using $5,000 in cash and $5,000 as leverage. This will get you buy all the contracts. But if the price of the ETH moves in the other direction which causes the price of the asset to fall from $100 to $90. This may simply cause 20% or $1,000 loss of the total equity of the investor.
It is because all the losses of the downside are only deducted from the investor’s equity and in order to save his position; the investor has to maintain his position by depositing more money into his account. If the investor holds the same position without depositing more money; the position gets liquidated as soon as the position is down 50% and the investor loses all his money.
For any inquiries contact us at firstname.lastname@example.org.
Follow our official Twitter account to be updated on the latest news.
Join our community on Telegram to interact with us and the Phemex traders.