What is margin trading?

[Cryptopotato021]

I have been in the cryptocurrency trading world for the past 10 months and couldn't make much profits when the market moved to bear phase. I have been reading about margin trading and have not been able to wrap my head around it? I think i can make some money in the bear phase! Am i correct?

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[Coyster]

Firstly you can earn money in any market,be it the bull or the bear, only "glory days" investors actually wait for the bull market to invest..
Real bitcoin investors take advantage of any market to maximize profits,as buying low and selling high would be some profitable business,woudnt it??

Down to your question,margin trading???
To make it as concise and easy to understand as possible...
Margin trading is simply a sort of loan,borrowed by an investor to increase investing power/stake/capital..

Let's say you lack capital and you wanna invest in some project or in the bitcoin,margin trading allows you to take a sort of loan from a broker to increase your initial capital
And with an increase in your investment capital,would come an increase in your profit
Repayment to the broker most times comes with a little interest though

[Conasse]

Google knows everything...

https://www.investopedia.com/university/margin/

Margin trading refers to the practice of using borrowed funds from a broker to trade a financial asset, which forms the collateral for the loan from the broker. Since such use of financial leverage can potentially magnify gains but could also saddle the trader with devastating losses, leverage has the well-deserved reputation of being a double-edged sword.

https://economictimes.indiatimes.com/definition/margin-trading

In the stock market, margin trading refers to the process whereby individual investors buy more stocks than they can afford to. Margin trading also refers to intraday trading in India and various stock brokers provide this service. Margin trading involves buying and selling of securities in one single session. Over time, various brokerages have relaxed the approach on time duration. The process requires an investor to speculate or guess the stock movement in a particular session. Margin trading is an easy way of making a fast buck. With the advent of electronic stock exchanges, the once specialised field is now accessible to even small traders.

https://www.creditdonkey.com/what-margin-trading.html

Margin trading is like investing with someone else's money. In this case, it's your broker's money. You can look at it like a loan. But it has stricter requirements. You aren't required to make monthly payments on the money borrowed. However, interest does accrue. The amount you owe continues to grow until you pay the amount off in full.

[marcbitcoins]

I have been in the cryptocurrency trading world for the past 10 months and couldn't make much profits when the market moved to bear phase. I have been reading about margin trading and have not been able to wrap my head around it? I think i can make some money in the bear phase! Am i correct?

I think it is difficult to conclude at this moment of what will be the margin trading because of this bearish market which still in effect in which it makes the price value to become more volatile that even the experts day traders are having difficulties about it. Maybe this is possible if the bullish run will start.

[adaseb]

The issue with margin trading is that it comes with greed and many people basically over leverage themselves and end up getting stopped out.

This is the reason why with stocks you got max leverage at 3x because if they allowed 100x like they do on Bitmex then everybody would be crying to the regulators that they got stop hunted and account was cleared out.

So its a double edge sword. But basically if you got good trading skills you can use it to your own advantage and make more money by borrowing funds (paying some interest) and making more money then you would just longing on 1x.

[vit05]

Margin Trade is a tool that allows you to earn money regardless of the market movement. So it is possible to make money with a Bear Market using short positions.

In a simple way, you borrow an amount of assets from the market that is superior to what you have on your account. And invest according to the direction you believe the market will follow. At Bitmex you can have a margin of 100x. This means that the amount you will invest in a position, short or long, will be equivalent to a 100x the BTC that you have on the wallet.

So you could make a lot of money with a low investment. But it can also leave you with nothing if you bet wrong.

[figmentofmyass]

I have been in the cryptocurrency trading world for the past 10 months and couldn't make much profits when the market moved to bear phase. I have been reading about margin trading and have not been able to wrap my head around it? I think i can make some money in the bear phase! Am i correct?

margin = borrowing. in this case, you use the collateral you own (BTC or USD) to secure additional borrowed BTC. you sell that borrowed BTC on the open market in hopes of buying back lower. the difference between your sell price and buyback price = profit.

for example, let's say you're trading on bitfinex and you have 1000 USD collateral. you can move that USD to your margin wallet, then open margin positions with a value of up to 3333.33 USD because the maximum leverage allowed is 3.3x. if you want to profit from declining prices, you'd open a short position.

here's bitfinex's intro to margin trading. it breaks everything down into simple terms: https://support.bitfinex.com/hc/en-us/articles/115004555165-Intro-to-Margin-Trading

[mraphael]

First of all you dont have to use leverage, but you need to trade on sites that offer it, to take short positions. Second, risk (stop loss) only a predifined percentage of deposited amount in a single transaction, for example 2%.

[Lighthouze]

Margin is trading is like for huge loans with very small collateral. As much you can make good money with it should trades go successful, bad trades can also ruin you totally and empty your account to zero. Some guy in a group I belong to lost over 1.8 BTC in a space of 3 days on BitMEX. That was how I got to know about it.

[ShadowBits]

I have been in the cryptocurrency trading world for the past 10 months and couldn't make much profits when the market moved to bear phase. I have been reading about margin trading and have not been able to wrap my head around it? I think i can make some money in the bear phase! Am i correct?

Margin trading is so risky and it does not fit with someone who is only a beginner in crypto space. You should atleast have an experience about trading and controlling your emotions.

[figmentofmyass]

First of all you dont have to use leverage, but you need to trade on sites that offer it, to take short positions.

if you're not using leverage, then you can just sell your BTC at spot instead of bothering with a margin interface. it's effectively the same thing. the only difference is when shorting, you need to buy back the coins to close the position.

Margin is trading is like for huge loans with very small collateral. As much you can make good money with it should trades go successful, bad trades can also ruin you totally and empty your account to zero. Some guy in a group I belong to lost over 1.8 BTC in a space of 3 days on BitMEX. That was how I got to know about it.

there's a world of difference between trading 100x on bitmex and trading 3x on bitfinex. i never use more than 10x leverage---more than that is too risky given the volatility of crypto. and when i use 10x, it's only with a small portion of my coins.

[sedahan13]

When crypto price overbought and the price will change to bearish, we should be out from spot trading and we should be short the price in margin trading. Margin trading is mean we can borrow the money from the broker or lender to have more balance to trade, with higher margin or leverage the risk also will higher, so for beginner trader dont use leverage more than 10 times. And chooce trading platform that offer leverage between 1x to 10x so we can chooce it as like as we want.

[The Sceptical Chymist]

Margin Trade is a tool that allows you to earn money regardless of the market movement. So it is possible to make money with a Bear Market using short positions.

Margin trading and short selling are two completely different things, though I think you can use margin to leverage your short sales. 

The bottom line (and the simplest answer to OP's question) is that margin IS a loan, and it's a loan given to you by the exchange you're trading on or, in the case of stocks, the broker you're using.  If the value of what you purchased (coin, stock, whatever) with the borrowed money and whatever you put in out of your own pocket falls beneath the amount required to pay off the loan, the exchange or broker is going to issue a margin call, which is a request for more collateral.  Either that, or they'll just sell whatever you bought and you lose everything.

Using margin is risky, and I've said it a thousand times that new traders should just trade with the funds they have before even contemplating borrowing money to trade.  And remember, there's interest you have to pay on the loan as well.  Be very careful if you're thinking about margin trading.  Lots of investors have gotten their heads handed to them when the market took an unexpected downturn, and there's always the possibility of that happening in crypto.

[atrocityx]

Be careful with margin trading in this range for crypto... this is where almost everyone gets rekt... down between 6000-6500...any bad candle or bart candle can hit your stop or liquidate you before you can even blink... if youre gonna go long or short on margin, make sure to enter on the extremities and be patient.. also don't put your stop at obvious places, because whales will find you.

[jacafbiz]

The thing here is that people only talk about them making money using margin trade but hen they lose money no one here about that, margin trade is very risky please for a start don't go more than 5x until you make a bet that go against you and learn from experience, please don't be greedy and I think people have started to mixed short position and margin trading together both are different

[bit-freedom]

Margin trading allow you to trade a bigger amount by taking up a loan. However, your position will be liquidated if your trade fall below the leverage %. Personally, I think margin trading is risky and you should know what you are doing before start to margin trade.

[Cryptomilz]

I'm sure you've heard of winner wins all before, the reverse could happen to you in margin trading, a case of loser losses it all.. It's more like taking a loan to trade and which has to be serviced too. It's often advised that as a beginner, you should stay away from margin trading and leave for it for the professional.

[Labonikhatun]

  It's simply the practice of either borrowing share or money from the broker. There are a couple ways that one can margin trade. Margin trading is buying stocks without having the entire money to do it. The exchange has an institutionalized method of buying stock without having the capital through the futures market. However, margin trading is an act of leveraging your Cryptocurrency existing portfolio on the exchange that supports margin lending to borrow or buy more Cryptocurrencies which you will use to participate in arbitrage trading for bigger profit.

[manggis97]

Yes margin trading is give opportunity to make profit by short the price,  and margin trading will allow to make profit when bearish market.  There are different margin trading, like CFDs and futures contract but all this the same thing,  the futures trading use contract or duration for open potition but in CFDs is not.  The level of risk is the same and according to how many leverage that we use.  Margin trading is more risky so we should be use stop loss for every trade.

[armarsterling7]

I have been in the cryptocurrency trading world for the past 10 months and couldn't make much profits when the market moved to bear phase. I have been reading about margin trading and have not been able to wrap my head around it? I think i can make some money in the bear phase! Am i correct?

margin trading is a dangerous area and I advise you not to engage in that area. In my country, there were a lot of suicides because of Margin. Not that they have no knowledge, but margin trading is really a gamble. The whales involved in that market are very much and the ever-changing market is the result of many people making margin trading.