If you are a little bit aware of the cryptrocurrency world, you must be knowing that cryptocurrency trading can be both sometime rewarding and sometimes may be risky. One needs to be very smart and need to learn all the basics before investing a considerable amount of money.
One may suppose that they have invested $1K in cryptocurrency and after a couple of days it gets valued as $2K. But, at the same time, one needs to know that thay may have a risk of getting initial investment reduced to $100.
Hence, it’s important for every investor to know an important trading concept whether it’s for rewads or risk. Here, margin trading plays a very significant role in achieving your investment.
What is margin trading?
Margin trading is just like the act of borrowing cryptocurrency or additional money by enhancing the number of cryptocurrencies that you already own. The trading is also referred as leverage trading which is just the implementation of old age method in the tradition markets.
The concept was started in the US and is now applied in various exchange platforms all across the world. But, in traditional markets, there are varied rules and regulations while the margin rules for cryptocurrency are quite simple. However, all the basic principles are almost the same.
Take an example:
Suppose, you need to make an investment of $2k in BTC but have only $1k. So, you need to borrow another $1k with a margin of 2:1. Hence, your $2k now become $3k
Now, you can imagine that BTC price increased by 50%, so your investment also enhanced.Hence, your $2k now become $3k and you pay back $1k to the lender and you enjoy the profits of $1k. But, at the same time, if BTC price decreased by 50%, it may cause loss.
Hence, the margin can be a reward as well as risk, so you always gain knowledge first before proceeding for margin trading.
However, if you want to acquire detail knowledge of margin trading, you can approach the toll free cash app support number +1 888 202 3317 and could gain the complete knowledge.
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