EasyCoins margin trading is a financial derivative of spot trading. Margin Trading allows users to increase their investment exposure given a limited base principal to enjoy multiple returns. However, they must also bear the corresponding increase in risk.
1. What is margin trading?
Margin trading refers to the practice of using borrowed funds from our platform to margin larger operable funds, enlarge the principal several times and invest more with small funds to obtain greater returns. At the same time, investors must also bear the risks of loss. Because the price of digital assets fluctuates greatly, you must fully understand the risks of margin trading and proceed with caution.
2. How can I use margin to double profits during price increases?
For example, with BTC / USDT, the Current BTC price is 8000USDT, you have a principal of 8000USDT and you choose to use 3 times margin to make long. To do this, you can borrow 16,000USDT from the platform and buy 3 BTC at the price of 8000USDT. When the price rises to 10000USDT, you can sell them and receive 30000USDT. After returning the 16000USDT principal and the actual calculated interest, excluding your principal of 8000USDT, the rest will be profits, which in this case is about 6000USDT. That is to say, the price of BTC has only increased by 25%, but you have gained close to 75% and obtained 3 times the gains by using 3 times margin.
3. How can I use margin to make money when prices fall?
For example, with BTC / USDT, the Current BTC price is 10000USDT, you have 1 BTC of principal, and you choose to use 3 times margin to make short. To do this, you can borrow 2 BTC from the platform and sell 3 BTC at the price of 10,000USDT. When the price falls to 8000USDT, buy 3.75 BTC again. After returning two BTC and the actual calculated interest and excluding 1 BTC of your principal, the rest is your gain of about 0.75 BTC. That is to say, the price of BTC has fallen by 20%, but you have gained 75% gains by using 3 margin times, realizing profits against the market.
4.How do I calculate the margin loan rate?
It will be calculated once when the application for margin is successful and every day thereafter at 0:00.
5. What are the risks of margin trading?
Margin uses fewer funds to realize the possibility of obtaining greater returns. However, if the market trend is incorrectly judged, the losses will also increase accordingly. Therefore, ordinary traders typically avoid high margin heavy positions to prevent liquidation or even penetration.
6. How to reduce margin risk rate
Use margin ratios reasonably to control your positions;
Stop profits and losses in time and close positions spontaneously;
Timely additional margins should ensure that the ratio of total assets/leverage quota is greater than 110% to avoid liquidation.