In cryptocurrency, margin trading refers to borrowing funds with a set interest rate to trade with. After closing a trade, the borrowed amount plus interest is returned to the lender and the trader keeps the rest profit. Margin trading, also called leveraged trading, relies on a multiplicity factor called “leverage”. Furthermore, margin trading allows for both “longing” and “shorting”. In a long, a trader borrows funds, buys at a low price, sells at a high price, returns the borrowed funds with interest, and keeps the profit. In a short, a trader borrows funds, sells a high price, buys back at a low price, returns the borrowed funds with interest, and keeps the profit.
Continue Reading →