Understanding the risk of liquidation through marketing margins: Careful cryptocurrency guide

Cryptocurrencies have given birth to a new trade era though the potential reward for investing in cryptocurrency is significant, but in this world there is also a darker side: marketing marketing.

Trade margin includes borrowing money from a broker or exchange to increase any account of your account can be disastrous.

Trade trade, risk of liquidation and how to mitigate them in cryptocurrencies.

** What is the margin?

Trade margin allows you to finance your transactions. The idea of ​​margin trade is that if your position contradicts you, the lender will cover some of your losses.

In the Margin account and buy $ 5,000 on the Bitcoin stock exchange 1 USD = 3 BTC. Your account balance would be:

• Initial Deposit: $ 10,000

• Borrowed funds (from lender): $ 0 (since we did not borrow any money)

• Possible trade balance: $ 10,000

Risk of liquidation

Liquidation occurs when your margin is considered too high to maintain. In cryptocurrencies this can happen when:

• Prices Movement Before You :

• position size exceeds available funds :

; For example:

• If you sell 1 BTC when the exchange rate is 10 USD = 3 BTC, you will remain $ 2,000.

• The stock exchange will deduct 50% of your initial investment (eg $ 10,000 to $ 5,000) as well as interest.

Reduction of Cryptocurrency Risk

While liquidation can be disastrous, there are ways to reduce its effect:

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4.

Best trading margin of cryptocurrency

Follow the best practices in the margin margin accounts:

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• Be informed and patient

  : Constantly monitor market trends and adjust your strategy if necessary.

Conclusion

While marketing margin can be an exciting way to invest in cryptocurrencies, it is very important to understand the risk of liquidation.

Tether Role Crypto Market