Essentially, trading on margin allows you to multiply your investment power by borrowing funds from the exchange. Imagine that with just $100 you can control a position of $1,000 (10x leverage). This means that:
- Profits are amplified: A 2% return would no longer be $2, but $20
- But also losses: A 10% drop would liquidate your position completely
The real danger comes from the volatility of the markets. Cryptocurrencies can move 10% in minutes, and with margin, that movement can take you out of the game instantly. That's why experts recommend:
1️⃣ Never trade on margin without a stop-loss
2️⃣ Start with low leverage (2x-3x)
3️⃣ Allocate only 5% of your capital to this type of trading
Is it worth it? For experienced traders who master technical analysis and manage risk well, yes. But data shows that 75% of retail traders lose money using margin. The key is to use it strategically, not as a gamble.
