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What is the definition of initial margin in the context of cryptocurrencies?

avatarFarid RzayevDec 18, 2021 · 3 years ago1 answers

Can you explain what initial margin means in the context of cryptocurrencies? How does it work and why is it important?

What is the definition of initial margin in the context of cryptocurrencies?
Cryptocurrencies
Initial Margin
Trading

1 answers

  • avatarDec 18, 2021 · 3 years ago
    Initial margin in the context of cryptocurrencies is the amount of funds that traders must deposit in order to open leveraged positions. It serves as a form of collateral to cover potential losses. By requiring initial margin, exchanges can protect themselves from default risk and ensure the stability of their platform. Traders should be aware of the initial margin requirements of the exchange they are using and ensure that they have sufficient funds to cover potential losses. It's also important to regularly monitor positions and adjust margin levels as needed to avoid liquidation.

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