At the request of Verm

Remember that margin trading is a way of trading where you can borrow funds (leverage) from the exchange to increase the size of the trade. This allows you to earn more, but also increases risks.

💡 How leverage works 💡

Leverage is a multiplier that shows how much you can increase the amount of your trade.

For example:

❗️1x — you are trading only with your own money.

❗️5x — the exchange adds $400 to your $100. In total, you are trading $500.

💡 Important! The higher the leverage, the greater the risks: if the price goes against you, you will lose money faster.

How margin trading works

Example (buying BTC with leverage):

📌 You have $100 in your balance.

📌 You are using 5x leverage. This means the exchange will add another $400.

📌 Now you have $500 for trading.

📌 The price of BTC (current at the time of writing): $98,044.71.

📌 With your $500 you can buy 0.0051 BTC.

📌 If the price of BTC rises to $100,000, your profit will be:

0.0051 BTC × (100,000 - 98,044.71) = $10 .

📌 If the price of BTC falls to $96,000, your losses will be:

0.0051 BTC × (98,044.71 - 96,000) = $10 .

💡 Liquidation 💡

Liquidation, an automatic closing of a trade by the exchange to recover borrowed funds.

Example:

📌 You are using 5x leverage.

📌 You have $100 in your account.

📌 If the price of BTC falls significantly (about 20%), the exchange will liquidate your position to recover its funds.

It's very important to use a stop-loss

In margin trading, a stop-loss is mandatory! It helps avoid total liquidation.

Example:

📌 You bought BTC at a price of $98,044.71

📌 Set a stop-loss at $97,000

📌 If the price falls to $97,000, the trade will automatically close, and you will only lose part of your funds, not everything.

💡 How to profit from a price drop (short) 💡

Margin trading allows you to profit even from a price drop — this is called shorting.

Example:

📌 You borrow 0.0051 BTC from the exchange and sell it at the current price of $98,044.71

📌 If the price drops to $96,000 you buy back 0.0051 BTC for a lower amount.

❗️Your profit:

(98,044.71 - 96,000) × 0.0051 = $10.42 .

💡 Risk management 💡

📌 Do not use high leverage (start with 2x-3x).

📌 Always set a stop-loss and take-profit.

📌 Do not risk your entire deposit amount.

Good luck with trading!

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