What are the distinctions between buying cryptocurrency on margin and experiencing a margin call?

1 answers

• Dec 16, 2021 · 3 years ago
  Buying cryptocurrency on margin allows you to leverage your investment and potentially increase your profits. It works by borrowing funds from the exchange or broker to increase your buying power. This means you can control a larger position with a smaller amount of capital. However, it's important to note that margin trading also comes with higher risks. If the market moves against you, your losses will be magnified. A margin call occurs when the value of your margin position falls below a certain level, and you're required to deposit additional funds to maintain your position. If you fail to do so, your position may be liquidated. It's crucial to have a solid risk management strategy in place when engaging in margin trading to avoid margin calls and protect your investment.
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