Margin trading is a transaction with financial assets, which involves the use of borrowed funds provided by a stock market broker or forex dealer against the security of the acquired assets.
In practice, this means that a trader can use more money than he has, but in losses he is limited only by his capital.
Margin is the amount of equity that is required to conclude a transaction with a certain asset with the participation of available borrowed capital.
What is initial margin and minimum margin
The initial requirements for margin trading are the amount of funds required to open a position, taking into account the provided leverage.
The minimum margin, in turn, shows the level of funds, upon reaching which the trader's position can be forcibly closed by the broker at the market value, a loss is recorded.
The spot market is a market with special conditions for settlements between participants in a transaction. Transactions in such a market are called spot or cash transactions. The instantaneous emergence of ownership rights at the time of the transaction is the main distinguishing feature of spot transactions.
The spot market is a market in which special conditions for settlements between the parties to the transaction apply. Such transactions are called spot transactions. The main distinguishing feature of such transactions is that new property rights arise instantly, at the same moment as the transaction was concluded.
What conclusions can be drawn from all this?
Spot trading involves short-term speculation, making a lot of transactions. Exchanges are best suited for this. Here, the easiest way is to quickly buy or sell cryptocurrency. There is an option and margin trading with leverage. However, it is suitable only for professionals, since it is much more risky.
My position is this: if during normal trading you can wait out an unexpected drop in the rate, then with margin trading very often a long drawdown of the rate ends in the loss of the deposit.
Good luck to all! Take care of yourself and your loved ones!