Understand the risk of trade margling cryptocurrency
The cryptocurrency world has grown exponentially over the years, as new technology and innovative products have emerged at an unprecedented pace. Among them is the margin trade-at-risk investment strategy, allowing consumers to borrow money from brokers to trade cryptocurrency trading. However, since the value of cryptocurrencies can fluctuate quickly, including the risk of marketing marketing.
What is the marketing margin?
Trade margin includes the use of borrowed money to buy or sell cryptocurrency at a settled price, hoping for profit from the difference between two prices. Consumers must open an account with a broker to participate in the margin trade. The brokerage company will then lend these funds to the consumer, allowing them to trade cryptocurrencies.
Margin Trade Benefits
Marginal traders can achieve higher returns than Spot traders as they can use their initial investments to buy a larger cryptocurrency. In addition, marketing markets can provide a sense of market impact and diversification, allowing consumers to try different cryptocurrency waters without risking the entire portfolio.
Risk associated with marketing margins cryptocurrency
Despite its benefits, margins are trading a high risk that should not be viewed easily. Some of the following risks include:
* Liquidity Risk : The most critical risk associated with marketing margin is liquidity. When you borrow money to buy or sell cryptocurrencies from margins, the broker will usually need funds equal to 20-50% of the trade value. If the cost of cryptocurrency falls below this limit, the buyer may not be able to cover his losses, which may result in significant losses for the merchant.
* Margling Calls
: Store store requires a minimum account balance known as a margin call. This is usually determined by 1-2% per day, and when this happens, the broker will send a warning that requires the consumer to pay extra funds or sell some of his positions to cover the deficiency.
* Margling Differences : Store trades are also greater differences in most transactions compared to Spot traders. The difference in margin is the difference between the cryptocurrency you buy and sell, and market price prices. For example, if you want to buy Bitcoin from margins, the minimum trade is $ 500, but if the market price is reduced to $ 400, your mediation company may take a margin for a margin.
* Leverage and unrealistic expectations : The use of leverage in margins can enhance both profits and losses. However, it is important to determine real expectations before engaging in this type of trade. High -risk transactions often result from excessive leverage, which means using too much borrowed money or a large part of the account balance.
* Depreciation risk : Cryptocurrencies are known for their volatility when prices fluctuate quickly and unpredictably. If you are not ready to absorb losses, the margin margin may quickly be out of control.
How to prevent the risk of margin trade
If you still want to engage in margin trade, you need to understand the risk before doing this:
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- Understand the risk of liquidity : Get to know the risk of liquidity associated with marketing.
- Keep a safe distance
: Avoid gaining more capital than you can afford to lose; Use Stop-Loss orders or other risk management methods to restrict possible losses.
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