#ProjectCrypto Meaning of the word "Margin" today
In the world of crypto, the term "Margin" refers to margin trading, which is a type of trading that allows you to borrow funds from the trading platform to buy or sell cryptocurrencies worth more than your actual balance.
Simplified explanation:
If you have $100 and want to open a position worth $500, the platform can grant you leverage (e.g., 5x), so you borrow $400 and use $100 as margin.
This gives you the opportunity to achieve greater profits if the market moves in your favor.
However, if the market moves against you, you may quickly lose your funds and your position may be liquidated if the value of the trade drops significantly.
Key terms related to Margin:
Leverage: the ratio between your funds and the borrowed amount.
Liquidation: when you lose all your margin due to negative market movement.
Initial Margin: the amount you deposit to open a position.
Maintenance Margin: the minimum amount that must be maintained to avoid liquidation.
⚠️ Margin trading carries high risks and is only recommended for experienced traders.