Topic: Is margin trading worth checking out? - page 3. (Read 1012 times)
It seems to me that since the opportunity to trade cryptocurrencies more actively, the morning game appeared a lot of different opportunities to improve their activities and their results. First of all, margin trading in cryptocurrency, which, due to its specificity, gives a professional the opportunity to get a really good income. Well, that can even be the main source of income for such a trader.
For me, yes it is worth checking out and if you know how trading works and knows how the market is moving then you can go with margin trading to increase your winning capital but if you aren't sure yet about crypto trading then better don't enter in margin trading.
This is warning many of us traders has sound several time and it is good we should be told that trading is a very risky thing and going into trade or making decisions to start trading without adequate knowledge on how trading work is a financial suicidal and it is good to avoid it completely if you cannot taking risks.margin trading is very profitable to those who has the skills to trade it. I have been trading margin through poloniex and I have never gotten regret of it as though I made some loses but I am above 50% winning and in margin trading that is what matter. I learn to trade margin when I was into forex trading and I understand the risk involved therefore I only put money I can afford to lose.
if the leverage is low, what goes up must come down, and in the part of crypto trading, especially Bitcoin trading, whatever level it plummet to, it will surely rise back to give profit. So we just have to take greed out of this trade completely.
For me, my first impression of margin trading is the danger to investors' assets. It is really a hard game and is hunted by many whales. Sometimes many people bet a lot of money, the whale can see that command and start manipulating the opposite. That's why so many traders disrupt what margin trading is. I do not encourage people to participate in this type of transaction.
Whales manipulate every trading market. You just have to follow the ride and have enough assets from both sides to be able to follow their trades. This is tough and very likely would lead to a loss for any newbie trader. Whoever goes in with the idea of making easy money from margin trading is definitely going to lose, be it whatever enticing offer that a broker might be giving them.If you care about your money and dont have prior experience of making money from margin trading, by all means dont risk it.
The only market where I can ever advise people to go for margin trade is onforex trading because there is less volatility and market is not that much manipulated in forex. Margin trade can really make any dude so much money when it is used successfully, but it’s application is more like gambling and the chances of winning to losing is 50:50.
This is a copy of an earlier post I made regarding margin, hopefully it will make sense in understanding margin trading a little bit.
Hello All
I've noticed that margin trading questions keep popping up on this forum and there seems to be a lot of misconceptions, misunderstanding regarding this issue as well as just lack of knowledge. I totally understand this as I struggled to understand margin trading and the issues surrounding it when I first started to trade, so a helping hand from me to those learning to trade and wanting to know more and understand margin trading.
I will provide an analogy in regards to MT (margin trading), in a way that hopefully makes sense to you as it did to me.
I'm sure you have probably you have heard that MT amplifies your gains and losses. Lets see how purchasing with and without MT effects your account balance and the risks and rewards involved with MT.
The analogy I am going to use is the purchase of a house using a loan/mortgage, as the principle is similar to trading crypto with margin. This is a transaction many of us make in some points of our lives so understand it better.
You decide to buy a house worth 100k. Your bank requires a 10% deposit (10k).
You are therefore looking to buy this house on ratio of 10/1 (or another way of saying it is on a leverage of 10/1)
If the bank had required 20% you would be buying at a ratio of 5/1 (leverage of 5/1).
Your initial deposit (or MARGIN) for the house is 10k and this is what your bank requires and will use as a risk mitigating factor to avoid its potential loss on its loan to you (expained later).
lets say your house price after a few months after purchase has increases by 10% to 110k.
So your initial investment was 10k and your house has now risen in value by 10k. You have therefore made a 100% profit (ROI) on your initial capital investment if you were to now sell the house. Hoorayyy you have made an awesome investment.
If the house had risen by 1% or say 5% (to 101k or 105k) you would have made a profit/return on investment (ROI) of 10% (1k) or 50% (5k) on your initial investment of 10k.
Now Lets look at if you purchased the house with no loan from the bank (NO deposit/margin) using a full 100k you had saved from work.
Again the value has increased by say 1%, 5% or 10% to (101k or 105k or 110k). The profit you have made would have been either 1k, 5k or 10k. So a ROI of 1%, 5% or 10% on a 100k initial investment. You can immediately see even though your returns were the SAME! your ROI was way LESS with this method of purchase due to the larger amount of capital you used to purchase the house.
Now lets look at the opposite scenario.
The house price starts to decline for whatever reason.
You purchased on a leverage of 10/1 (10k yours 90k bank).
a 1% decrease (house price 99k), 5% decrease (house price 95k), 10% decrease (house price 90k).
If the above scenarios occurred you would have lost 10%, 50% or a total loss of 100% respectively on your initial capital of 10K!!! damn wiped out completely with 10% move against you so no more buying for you!!!
If you had used NO money from the bank and purchased the house with 100k of saved funds.
a 1%, 5% or 10% decrease would have reduced your capital investment by 1k, 5k or 10k respectively, therefore you would be left with 99k, 95k or 90k.
Below is the loss you would occur if you have used different leverage (borrowing ratios) and subsequently (DIFFERENT deposit/MARGIN allowance amounts) with a 10k investment and the price decreases.
10/1 (10k yours 90k bank) 1% decrease =1k loss=10% loss on initial investment=9k
50/1 (2k yours 98k bank) 1% decrease =1k loss=50% loss on initial investment=1k
100/1 (1k yours 99 bank) 1% decrease=1k loss=100% loss on investment=0
As you can see in the third scenario a 1% decrease would have wiped out 100% of your 1k deposit/margin allowance due to the highly borrowed ratio (leverage) amount.
The BIG question most ask is what happens if the decrease in value is more than your initial investment!!!!. Well let me tell you something, before that even happens the bank will forcefully sell the property as soon as the decrease is close to (60/80%) your initial investment amount and will certainly avoid ANY LOSS to their balance sheet and borrowed amount. To add insult to injury, they will return a small balance leftover (usually not very much at all after they have taken all their fees to sell your house in an emergency).
Lets now look at a different scenario and say you want to purchase flats worth 30k each instead of a house, and the bank still lends at a ratio (leverage) of 10/1. The bank therefore requires a 3k initial deposit (or margin required) per flat (3k yours 27k bank).
With your initial 10k you can purchase 3 flats on 10/1 leverage and still have 1k left over.
You have now made multiple purchases using your same 10k deposit and are still looking for another investment for your 1k that is remaining.
Now relating the above to trading crypto using margin. The principle is exactly the same, you are borrowing to buy or sell a larger position using a small deposit in your account (margin allowance). You can open one position or multiple positions depending on the leverage you use and an amount from your account will be used as a deposit by the exchange (or otherwise known as USED MARGIN ALLOWANCE allocated to that buy or sell position by your exchange). If the position moves against you significantly (60/70% decrease), you will receive a margin allowance call (the exchange WARNING you) to say your allocated MARGIN/deposit is low according to their requirements. They will allow you do close the position or ask you to increase your MARGIN/DEPOSIT by adding more funds
BTC is currently at $8300, to buy or sell 1 full BTC using MARGIN and different LEVERAGE options
a 5/1 position will require $1660 as your margin deposit (1/5th of the total position) - (a 20% negative swing in price for total loss of funds)
a 10/1 position will require $830 as your margin deposit (1/10th of the total position) -(a 10% negative swing in price for total loss of funds)
a 50/1 position will require $166 as your margin deposit (1/50th of the total position) -(a 2% negative swing in price for total loss of funds)
a 100/1 position will require $83 as your margin deposit (1/100th of the total position) -(a 1% negative swing in price for total loss of funds)
As you can see, you can buy ONE WHOLE bitcoin with only $83 on 100/1 leverage!!!before you get all happy, you need to understand price will only need to move 1% against you, for you to be liquidated by the exchange.
A LIQUIDATION will occur when the exchange forcefully sells your position due to insufficient margin/deposit in your account for that position you opened that has moved against you significantly, and therefore the exchange recovers their borrowed funds from you. You will get liquidated before you reach a complete loss (known as bankrupt price).
You should not be getting Liquidated or even risk liquidation. If you are, you are very likely trading incorrectly. (unless high risk is part of your strategy and you position size accordingly)
Margin trading is something all professionals use and is a step up from normal trading. As you can see you can buy (go long) or sell (go short) on a larger position using a small amount.
Most professionals usually DO NOT RISK more than 5% of their TOTAL account per trade. Your risk/loss tolerance should be strongly taken into account when margin trading.
Hello All
I've noticed that margin trading questions keep popping up on this forum and there seems to be a lot of misconceptions, misunderstanding regarding this issue as well as just lack of knowledge. I totally understand this as I struggled to understand margin trading and the issues surrounding it when I first started to trade, so a helping hand from me to those learning to trade and wanting to know more and understand margin trading.
I will provide an analogy in regards to MT (margin trading), in a way that hopefully makes sense to you as it did to me.
I'm sure you have probably you have heard that MT amplifies your gains and losses. Lets see how purchasing with and without MT effects your account balance and the risks and rewards involved with MT.
The analogy I am going to use is the purchase of a house using a loan/mortgage, as the principle is similar to trading crypto with margin. This is a transaction many of us make in some points of our lives so understand it better.
You decide to buy a house worth 100k. Your bank requires a 10% deposit (10k).
You are therefore looking to buy this house on ratio of 10/1 (or another way of saying it is on a leverage of 10/1)
If the bank had required 20% you would be buying at a ratio of 5/1 (leverage of 5/1).
Your initial deposit (or MARGIN) for the house is 10k and this is what your bank requires and will use as a risk mitigating factor to avoid its potential loss on its loan to you (expained later).
lets say your house price after a few months after purchase has increases by 10% to 110k.
So your initial investment was 10k and your house has now risen in value by 10k. You have therefore made a 100% profit (ROI) on your initial capital investment if you were to now sell the house. Hoorayyy you have made an awesome investment.
If the house had risen by 1% or say 5% (to 101k or 105k) you would have made a profit/return on investment (ROI) of 10% (1k) or 50% (5k) on your initial investment of 10k.
Now Lets look at if you purchased the house with no loan from the bank (NO deposit/margin) using a full 100k you had saved from work.
Again the value has increased by say 1%, 5% or 10% to (101k or 105k or 110k). The profit you have made would have been either 1k, 5k or 10k. So a ROI of 1%, 5% or 10% on a 100k initial investment. You can immediately see even though your returns were the SAME! your ROI was way LESS with this method of purchase due to the larger amount of capital you used to purchase the house.
Now lets look at the opposite scenario.
The house price starts to decline for whatever reason.
You purchased on a leverage of 10/1 (10k yours 90k bank).
a 1% decrease (house price 99k), 5% decrease (house price 95k), 10% decrease (house price 90k).
If the above scenarios occurred you would have lost 10%, 50% or a total loss of 100% respectively on your initial capital of 10K!!! damn wiped out completely with 10% move against you so no more buying for you!!!
If you had used NO money from the bank and purchased the house with 100k of saved funds.
a 1%, 5% or 10% decrease would have reduced your capital investment by 1k, 5k or 10k respectively, therefore you would be left with 99k, 95k or 90k.
Below is the loss you would occur if you have used different leverage (borrowing ratios) and subsequently (DIFFERENT deposit/MARGIN allowance amounts) with a 10k investment and the price decreases.
10/1 (10k yours 90k bank) 1% decrease =1k loss=10% loss on initial investment=9k
50/1 (2k yours 98k bank) 1% decrease =1k loss=50% loss on initial investment=1k
100/1 (1k yours 99 bank) 1% decrease=1k loss=100% loss on investment=0
As you can see in the third scenario a 1% decrease would have wiped out 100% of your 1k deposit/margin allowance due to the highly borrowed ratio (leverage) amount.
The BIG question most ask is what happens if the decrease in value is more than your initial investment!!!!. Well let me tell you something, before that even happens the bank will forcefully sell the property as soon as the decrease is close to (60/80%) your initial investment amount and will certainly avoid ANY LOSS to their balance sheet and borrowed amount. To add insult to injury, they will return a small balance leftover (usually not very much at all after they have taken all their fees to sell your house in an emergency).
Lets now look at a different scenario and say you want to purchase flats worth 30k each instead of a house, and the bank still lends at a ratio (leverage) of 10/1. The bank therefore requires a 3k initial deposit (or margin required) per flat (3k yours 27k bank).
With your initial 10k you can purchase 3 flats on 10/1 leverage and still have 1k left over.
You have now made multiple purchases using your same 10k deposit and are still looking for another investment for your 1k that is remaining.
Now relating the above to trading crypto using margin. The principle is exactly the same, you are borrowing to buy or sell a larger position using a small deposit in your account (margin allowance). You can open one position or multiple positions depending on the leverage you use and an amount from your account will be used as a deposit by the exchange (or otherwise known as USED MARGIN ALLOWANCE allocated to that buy or sell position by your exchange). If the position moves against you significantly (60/70% decrease), you will receive a margin allowance call (the exchange WARNING you) to say your allocated MARGIN/deposit is low according to their requirements. They will allow you do close the position or ask you to increase your MARGIN/DEPOSIT by adding more funds
BTC is currently at $8300, to buy or sell 1 full BTC using MARGIN and different LEVERAGE options
a 5/1 position will require $1660 as your margin deposit (1/5th of the total position) - (a 20% negative swing in price for total loss of funds)
a 10/1 position will require $830 as your margin deposit (1/10th of the total position) -(a 10% negative swing in price for total loss of funds)
a 50/1 position will require $166 as your margin deposit (1/50th of the total position) -(a 2% negative swing in price for total loss of funds)
a 100/1 position will require $83 as your margin deposit (1/100th of the total position) -(a 1% negative swing in price for total loss of funds)
As you can see, you can buy ONE WHOLE bitcoin with only $83 on 100/1 leverage!!!before you get all happy, you need to understand price will only need to move 1% against you, for you to be liquidated by the exchange.
A LIQUIDATION will occur when the exchange forcefully sells your position due to insufficient margin/deposit in your account for that position you opened that has moved against you significantly, and therefore the exchange recovers their borrowed funds from you. You will get liquidated before you reach a complete loss (known as bankrupt price).
You should not be getting Liquidated or even risk liquidation. If you are, you are very likely trading incorrectly. (unless high risk is part of your strategy and you position size accordingly)
Margin trading is something all professionals use and is a step up from normal trading. As you can see you can buy (go long) or sell (go short) on a larger position using a small amount.
Most professionals usually DO NOT RISK more than 5% of their TOTAL account per trade. Your risk/loss tolerance should be strongly taken into account when margin trading.
Like others have said in this thread. Its basically like a double-ended sword.
Its great when you are right because you can make multiple amounts of profit rather than being in a 1x position. But its bad when you over-leverage yourself due to greed and a small market move makes you lose all your capital.
This is why stock market is capped at 3.3x margin and only for high cap stocks. You can't do 10x or 50x on a traditional stock market. The reason why is because if it was possible too many people would get liquidated and would have crazy spikes like we have in BTC markets.
Its great when you are right because you can make multiple amounts of profit rather than being in a 1x position. But its bad when you over-leverage yourself due to greed and a small market move makes you lose all your capital.
This is why stock market is capped at 3.3x margin and only for high cap stocks. You can't do 10x or 50x on a traditional stock market. The reason why is because if it was possible too many people would get liquidated and would have crazy spikes like we have in BTC markets.
Any kind of trading is good when we know how to handle the market situation in the best profitable way,but as a beginner don't examine too much just stick with basic trading technique and keep the trading amount to be less than your holding which can teach you to how to trade and get better at it.
A successful traderer doesn't need to know all trading methods available,one will be enough if he is extremely good at it.
A successful traderer doesn't need to know all trading methods available,one will be enough if he is extremely good at it.
Margin trading is very risky. It is definitely worth trying out. If you are lucky then you can earn a lot. If things can't go in your favor then you can lose a lot too.
For me, yes it is worth checking out and if you know how trading works and knows how the market is moving then you can go with margin trading to increase your winning capital but if you aren't sure yet about crypto trading then better don't enter in margin trading.
This is warning many of us traders has sound several time and it is good we should be told that trading is a very risky thing and going into trade or making decisions to start trading without adequate knowledge on how trading work is a financial suicidal and it is good to avoid it completely if you cannot taking risks.margin trading is very profitable to those who has the skills to trade it. I have been trading margin through poloniex and I have never gotten regret of it as though I made some loses but I am above 50% winning and in margin trading that is what matter. I learn to trade margin when I was into forex trading and I understand the risk involved therefore I only put money I can afford to lose.
I know a few people that trade on Kraken because it's one of the few sites open to US traders that allows them to leverage, however I don't use it because there are often wicks on the site that can go significantly further than wicks on other sites, such as just a few hours ago when Kraken's BTCUSD pair wicked down to 8456 whereas Coinbase Pro stayed near 8800. Pretty important in leveraged trading since one of these wicks can liquidate you pretty easily. Up to you in the end, even with Bitmex's faults I still choose to use Bitmex over any other leveraged exchange (and sometimes Deribit as well).
This is literally the problem when it comes to leverage where its always important to check it out on how those wicks goes on precise or accurate manner.Not all platforms would really be similar and even its a minor issue but this one can really be a big cause to blow up your account if you don't know how to compare
or do put importance on it.
If you're gonna be a pro trader and work with large amounts, then yes.
I know a few people that trade on Kraken because it's one of the few sites open to US traders that allows them to leverage, however I don't use it because there are often wicks on the site that can go significantly further than wicks on other sites, such as just a few hours ago when Kraken's BTCUSD pair wicked down to 8456 whereas Coinbase Pro stayed near 8800. Pretty important in leveraged trading since one of these wicks can liquidate you pretty easily. Up to you in the end, even with Bitmex's faults I still choose to use Bitmex over any other leveraged exchange (and sometimes Deribit as well).
For me, yes it is worth checking out and if you know how trading works and knows how the market is moving then you can go with margin trading to increase your winning capital but if you aren't sure yet about crypto trading then better don't enter in margin trading.
For me, my first impression of margin trading is the danger to investors' assets. It is really a hard game and is hunted by many whales. Sometimes many people bet a lot of money, the whale can see that command and start manipulating the opposite. That's why so many traders disrupt what margin trading is. I do not encourage people to participate in this type of transaction.
Whales manipulate every trading market. You just have to follow the ride and have enough assets from both sides to be able to follow their trades. This is tough and very likely would lead to a loss for any newbie trader. Whoever goes in with the idea of making easy money from margin trading is definitely going to lose, be it whatever enticing offer that a broker might be giving them.If you care about your money and dont have prior experience of making money from margin trading, by all means dont risk it.
It is definitely dangerous but when people get bored it definitely takes out the best of them and when you are at the bottom of a pit with no way out any rope thrown your way is a bliss. I do not trade with margin anymore since I have better things to do but at one point I really did picked it up because I felt like both trading regular or casinos or PC games wouldn't help me become less bored and I had to find something new and wanted to have fun, so I put 100 bucks in and tried it, I said to myself this was closer to gambling than actual trading and I am willing to lose this 100 bucks but all I wanted was to make it as long as possible without losing it, I think I went with that same 100 bucks for 2 months, early days being more involved and later it got boring again and then one day when I was super bored I just went all in on very high leverage and lost it all.
You got bored because profiting out of those 100 bucks is too slow and you know deep inside that you are willing to lose those amounts without regretting.If the amounts were too big then you wouldn't do such thing.Good thing here is that you do able to make 200% on 2 months time which is considerable but
your boredom do hits you up.
Yes it is worth it and is definitely worth learning about it.
Any person who is a serious trader margin trades.
I would recommend kraken.
Knowledge is key however. As in my case the best and quickest way I leaned was to try it. I would say start of with a very small balance, familiarise yourself with the various orders, margin allowance, liquidation etc, and then work your way up when you are ready.
Any person who is a serious trader margin trades.
I would recommend kraken.
Knowledge is key however. As in my case the best and quickest way I leaned was to try it. I would say start of with a very small balance, familiarise yourself with the various orders, margin allowance, liquidation etc, and then work your way up when you are ready.
It is definitely dangerous but when people get bored it definitely takes out the best of them and when you are at the bottom of a pit with no way out any rope thrown your way is a bliss. I do not trade with margin anymore since I have better things to do but at one point I really did picked it up because I felt like both trading regular or casinos or PC games wouldn't help me become less bored and I had to find something new and wanted to have fun, so I put 100 bucks in and tried it, I said to myself this was closer to gambling than actual trading and I am willing to lose this 100 bucks but all I wanted was to make it as long as possible without losing it, I think I went with that same 100 bucks for 2 months, early days being more involved and later it got boring again and then one day when I was super bored I just went all in on very high leverage and lost it all.
Hello everyone!
I’ve been trading in some few exchanges (e.g., Binance, Okex, Mercatox, MetaMorph Pro, etc.) from time to time. However, there’s something that I want to explore.
Recently, I’ve met a couple of guys who is promoting a margin trading platform. It’s the first time I’ve encountered a margin trading platform, and they said that it does not have the open orders feature like most crypto exchanges have.
Just like the crypto exchanges, we also invest and trade an amount that we could afford losing. But what are your thoughts about margin trading? Is it ideal for crypto day trading?
I would love to hear your thoughts or opinion regarding margin trading. Thanks in advance.
For me, my first impression of margin trading is the danger to investors' assets. It is really a hard game and is hunted by many whales. Sometimes many people bet a lot of money, the whale can see that command and start manipulating the opposite. That's why so many traders disrupt what margin trading is. I do not encourage people to participate in this type of transaction. I’ve been trading in some few exchanges (e.g., Binance, Okex, Mercatox, MetaMorph Pro, etc.) from time to time. However, there’s something that I want to explore.
Recently, I’ve met a couple of guys who is promoting a margin trading platform. It’s the first time I’ve encountered a margin trading platform, and they said that it does not have the open orders feature like most crypto exchanges have.
Just like the crypto exchanges, we also invest and trade an amount that we could afford losing. But what are your thoughts about margin trading? Is it ideal for crypto day trading?
I would love to hear your thoughts or opinion regarding margin trading. Thanks in advance.
Guys that are promoting a margin platform?? How sure are you on whether the platform is safe? You should as well do your own research before you choose to trade on that platform. I can't even tell whether to go for margin trading or not, because I don't know how that will work in trading a cryptocurrency. Margin trading is not quite an easy thing for anyone to do. I will suggest that you fist gather a lot of skills in the normal trading and after then you may decide to go for margin trading. Or if you think you're good in it already, then you can go ahead and try.
Right, it is easy for who already understand. But especially who still new in trading activity, it is something that you must do deep research about it because it is not simple like trading as usual. 
Guys that are promoting a margin platform?? How sure are you on whether the platform is safe? You should as well do your own research before you choose to trade on that platform. I can't even tell whether to go for margin trading or not, because I don't know how that will work in trading a cryptocurrency. Margin trading is not quite an easy thing for anyone to do. I will suggest that you fist gather a lot of skills in the normal trading and after then you may decide to go for margin trading. Or if you think you're good in it already, then you can go ahead and try.
Good thing you've met a couple who explained to you about margin trading. But it is not a typical crypto day trader that you have known. If you are pertaining to a day trading, then it is scalping or a swing trading. Have they explained to you the big risk associated with margin trading?
I suggest, if you are well interested in that field, you can do it on yourself. DYOR, try bitmex testnet: https://testnet.bitmex.com/ and explore how margin trading works.
I suggest, if you are well interested in that field, you can do it on yourself. DYOR, try bitmex testnet: https://testnet.bitmex.com/ and explore how margin trading works.
Jump to: