📊 Margin Trading Explained Simply
Margin trading is a financial strategy that allows you to trade with more money than you actually have, thanks to funds borrowed from a broker or platform. It's like using leverage to increase your buying or selling power.
🧠 How does it work?
• Own capital + loan: You contribute a portion of the capital (margin) and the rest is lent by the broker.
• Leverage: For example, with a leverage of 10:1, you can control $10,000 with just $1,000 of your own.
• Amplified gains and losses: If the market moves in your favor, you can earn more. But if it goes against you, you can also lose more quickly.
⚠️ Key Risks
• Margin call: If your losses exceed a certain limit, the broker may ask you for more funds or automatically close your position.
• Volatility: In markets like cryptocurrencies, sharp movements can liquidate your position quickly.
✅ When is it used?
• To take advantage of short-term opportunities.
• When there is high conviction in a market direction.
• On platforms that allow margin trading like #Binance