Margin or margin trading is the most attractive trading form for all traders.
Margin in addition to being affected by financial capital management, also related to emotional management.
For some it's quite far back, sometimes misunderstanding the concept. Surely you often hear people say: I am typing margin, long up, short down, x25, x100 or show the% recorded images there but do not understand what is it?
Today Blogtienao will give you all the concept of margin. Let's see how it works and make such a big profit.
What is margin?
Margin (margin trading) A form of trading where you use leverage to buy an investment for a larger amount of equity.
A simple explanation of margin is as follows: For a small amount, you can open a larger trade, maybe several hundred times more. And then, when the price changes in your favor, you get huge profits.
But the possibility of price does not move or move in the direction against you. For example: I find a transaction that looks good and plays great using large amounts of money, large leverage. And then I saw the order closed on the exchange itself and suffered huge losses.
So you can experience two sides of the margin then. Huge profits and risks are equally.
First, assess the opportunities that it provides:
- Increase the amount of investment
- Diversify investment opportunities
- Account soared quickly
Increase the amount of investment
This is obvious. You can control and trade large sums of money by borrowing money from the exchange. While only by your capital, purchasing power increased many times.
Diversify investment opportunities
Margin trading not only gives you the advantage of taking on larger positions than usual but also gives you the flexibility to build a portfolio.
Normally you have a small amount so it can only take up one position at that time. But with margin trading, you will be able to divide your capital to open multiple trades at the same time.
Therefore you have the opportunity to diversify your investment at a time of trading.
Account soared quickly
Before the margin trading, do you think how to increase your account balance exponentially with a small balance? It must be hard.
Trading with margin offers the opportunity to participate in different markets at the same time of day. Thus getting more profit from your trading and account increases exponentially, and also easier to manage.
A good piece of cake is hard to eat. At first glance, you see a huge gain, also need to assess its risks. However, if it is managed in a disciplined way, you will avoid the risk it poses. So what's the risk?
The risk level is high
This is the most obvious disadvantage of margin. To be able to control a position that is much larger than usual means that not only can the profit be greater, but your losses also skyrocket.
This is why you must follow very strict risk management and capital management rules when using margin.
Stress from not being able to handle emotions
Some traders cannot handle the emotion of opening a position too large. Because the fluctuations in their unrealized profits or losses are too great.
This makes them make the wrong decision. Leaving emotions between your trading decisions will cost you money in the long run. If you are unable to handle your major volatility then you should start with small leverage.
Terminology related to Margin
Margin has an interlinking term as follows:
- Margin (deposit) The money you use to buy the investment
- Leverage (leverage): Using leverage is the time to raise your investment. For example, invest $ 100 with leverage x100, you are investing that $ 10000. Leverage can be huge depending on the provider.
- Volume: is the product of (Margin) x (Leverage).
- Position: That is, the position includes Long (buy in) , and Short (sold out).
- Liquidation: This is the liquidation price. For example, you type Bitcoin margin. When the price of BTC exceeds the liquidation price, all of your invested capital will disappear.
How Margin works
For example, type margin on an exchange with the amount of capital in the order as Bta $
Step 1: You perform technical analysis and give me a comment:
- If you think the price will go up, you use the position Long.
- If you think prices will fall, you open your position Shorts.
Step 2: Choose your leverage. For example, if you use a leverage of 10, then the amount you borrowed from the floor is (10-1) * Bta = 9 * Bta.
- The general formula for a loan is (Leverage-1) * Amount of money entered the order.
Step 3: As a result of the above investment, there are 2 basic cases:
- TH1: You want to close an order or a floor when you reach a profit level. Trading results are profitable. Money is added to your account
- TH2: The price moves against your position. And by the time it reaches the liquidation price, the floor will recover the money you invest. As a result, you lose money,
End: In both cases, after the closure process, you must repay the amount you borrow and will pay an additional fee for your loan.
Summary : The trade margin process goes through the following summary chart:
Experience in trade margin hedging
Why do we use the word hedging, instead of using the word to make more profit. Because many people mistakenly think that: Margin makes a huge profit, so getting rich with it is not difficult. But they were really wrong.
For the best traders and get results from trading margin. Here, I mention negative profits, not huge profits. They have learned a few basic experiences:
- Investment: Is your own capital, your idle capital. Do not use borrowed or shared capital for a collective family or society.
- Lever: Leverage suitable if not liquidated very quickly there. Professional traders often say: “Instead of entering a 1 $ order using X100 leverage, you should enter a 100 $ order using X1 leverage“.
- Building strict trade rules: It takes serious and serious discipline to expect to make money from it.
- Don't let emotions mix (Exasperation, revenge, ...): Putting a profit, it's best to quit. Or continue to play but extremely small leverage. If a long / short order loses, close the device to rest and entertain the mind.
Which floor should i play (play) with?
I give you the best floor playing today. Along with that is fee and community rating. You refer and register the link you have available for you:
|2||Binance Futures||0.04%||Registration Link||7/10|
|3||LMT floor||0.075%||Registration Link||7/10|
|5||Bityard floor||0.1%||Registration Link||7/10|
|6||Bybit floor||0.075%||Registration Link||7/10|
In summary, I have outlined for you the problem when playing margin already. Please plan carefully when joining this market. Dear!