Margin Trading
Trading method based on borrowing funds to increase position size.
Beginner-friendly explanation
Margin trading means borrowing money to open a bigger position than your own capital. It’s risky but can be more profitable.
Example:
You have €100, borrow €100: now you trade with €200. If price goes up, you win more. But if it drops, you can lose everything.
Intermediate-level insight
Margin trading is done on a margin account. The platform lends funds with interest. You must watch your maintenance margin to avoid liquidation.
Example:
On Binance, you open a long BTC position. If it loses too much value, your position is liquidated to repay the loan.
Advanced perspective
Margin trading involves managing margin calls, understanding margin types (isolated vs cross), and having a clear strategy. It can be used for hedging, arbitrage, or moderate leverage.
Example:
A trader opens a short ETH position with isolated margin to hedge a long spot position, lowering global risk.
Markets & Order Types
margin, leverage, loan, liquidation, margin call, isolated margin, cross margin, interest rate