Spot trading, isolated margin, and cross margin

Did you know that there are 3 main types of trading on Binance? 🤔💡 Each type has its own advantages and uses, and you should understand them well before trading to avoid risks! 🚀

📌 In this guide, we will learn about:

✅ Spot Trading – The basic method of trading.

✅ Isolated Margin Trading – Limited risk per trade.

✅ Cross Margin Trading – Using the entire account balance as collateral.

⬇️ Follow the step-by-step explanation to understand which type suits you!

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📌 1️⃣ Spot Trading – The basic and safest method!

🔹 In spot trading, you buy and sell currencies directly at the current market price.

🔹 There is no borrowing or margin, making it the safest and least risky option.

🔹 If you buy BTC with 40,000 USDT, you own all of the Bitcoin in your wallet.

✅ When to use spot trading?

🔹 If you want to buy currencies and hold them for a long period (investment).

🔹 If you do not want to risk leverage or liquidation.

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📌 2️⃣ Isolated Margin – Reduce risk per trade!

📌 In this type of trading, the amount used is allocated to each trade separately.

📌 If a trade suffers a loss, the losses are limited only to the balance allocated to that trade.

💡 Practical example:

✅ You have 100 USDT and want to enter a 5X isolated margin trade on ETH/USDT.

✅ Binance will lend you an additional 400 USDT, allowing you to trade 500 USDT.

✅ If the deal is successful, your profits will be doubled, but if you lose, you will only lose the balance allocated for that deal.

🔥 Why use isolated margin?

🔹 If you want to try margin trading with less risk.

🔹 If you want to control your losses and not put your entire balance at risk.

⚠️ The only downside? If you don't add more collateral, the deal can easily be liquidated!

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📌 3️⃣ Cross Margin – Higher risk but higher flexibility!

📌 In this type, the entire margin account balance is used as collateral for trades.

📌 If a trade suffers a loss, the system can use your available balance to prevent liquidation.

💡 Practical example:

✅ You have 1000 USDT in your account and want to open a 10X cross margin trade on BTC/USDT.

✅ You can trade 10,000 USDT using leverage.

✅ If the price drops sharply, your entire account balance will be used before liquidation.

🔥 When to use cross margin?

🔹 If you are very confident in market movements and want to limit the risk of liquidation.

🔹 If you trade multiple trades and want to manage margin across all trades.

⚠️ The danger here? You could lose all your available balance if the market moves against you! 🚨

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💡 How to activate and trade margin on Binance? 🏦

🔹 Step 1️⃣: Open the Binance app and go to “Trading.”

🔹 Step 2️⃣: Click on “Margin” and then choose “Activate Margin”.

🔹 Step 3️⃣: Agree to the terms and complete the quick quiz to understand the risks.

🔹 Step 4️⃣: Transfer your assets to a margin wallet to start trading.

🔥 Do you prefer isolated or cross margin? And why? 🤔 Share your opinion in the comments! 💬⬇️

#KnowledgeIsPower #ZeroCostEducation