It is a type of trading that allows traders to use funds borrowed from the platform to increase their purchasing power. Instead of relying solely on your own capital, you can borrow funds from Binance, allowing you to amplify your profits (but also your losses).
How margin trading works:
1. Open a margin account: You must activate a margin account on the Binance platform and transfer funds to this account as collateral.
2. Borrowing: You can borrow certain assets based on the loan-to-collateral ratio (LTV). For example, if you deposit 1 BTC as collateral, you can borrow a certain percentage of its value in dollars.
3. Trading: Borrowed funds can be used to buy or sell cryptocurrencies.
You can trade in Long (bet on the price to rise) or Short (bet on the price to fall) mode.
4. Interest: Interest is charged on the borrowed money, and is calculated daily or according to the period of time you hold the deal.
5. Liquidation: If the value of the assets in your account falls below a certain level, the collateral may be liquidated to cover the loan.
🛟 Advantages of margin trading:
1. Increase potential profits:💸💸
You can make more profits with more capital.
2. Flexibility:
You can trade in the direction of the market whether it is up or down.
Risks:🥵
1. Increased losses: If the market moves against you, your losses can increase due to the use of leverage.
2. Liquidation: If the value of the collateral falls below a certain limit, you may lose it entirely.
How to start margin trading on Binance:
1. Open a Binance account (if you don't have one).
2. Activate the margin calculation through the “Margin” section on the platform.
3. Transfer assets to your margin account.
4. Borrow the required amount and start trading.
If you are new to margin trading, it is recommended to start with small amounts and fully understand the risks. You can check out the official guide from Binance
