I'm trying to wrap my head around the basics of margin trading. I understand that a broker is basically extending you a loan to purchase some stock, with the collateral for that loan being the other stocks and cash in your account. What I haven't been able to figure out is, how does one basically repay that loan, without selling the stock in question? For example, I buy $1,000 worth of MSFT on a margin account, and I want to keep that stock long-term. Basically, how do I settle that loan with my broker, so that I "own" the stock outright? (I suspect I'm not using quite the correct terminology here, but I hope the substance of my question is communicated clearly enough.)
Can you please help me understand how margin trading loss is calculated? Lets say we have this trade : Type: long Leverage: 3 Margin: 1102.25 Open price: 6613.5 Close price: 6540.1 Stop loss: 6457 Fee: 2.88 How much should be the loss and how do you calculate this correctly
Could someone please help me understand margin trading profits
Lets say I have 200 DASH as collateral and would like to go long on it vs USD with current price of 100$ per DASH. I buy only 200 DASH on margin and wait until the price goes to 1000$ DASH, what would be my profits estimately? I know you can't know how much interest would I be paying, but please give me an estimate. Also how does trade vs USD reflect on the liquidation price? If I have 200 DASH and borrow 200, then I guess until DASH is 0 I'm good to go? If I go long vs BTC by looking at the history seems like all I can earn is ×4, but If I go long vs USD then there is ×15 possibility, is that correct?
In margin trading, TOZEX provides for lenders and traders to get maximum out of the trading process by proposing them to open a position with up to 2x to 10x leverage. The lending amount is therefore provided in two ways: either the borrower places the amount of fund needed with the duration and rate of one’s choice or let the TOZEX system take out funds for the user at the most efficient rate at that opportune time once the user opens a position for trade. Visit: https://tozex.io/
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Can your short position be forcefully closed by an exchange?
Just trying to understand margin trading a bit better. My current idea of how it works is that an exchange acts as a matching engine for long/short positions. Thus, if I open a short position of 100ETH, there has to be somebody on the opposite side of the bet, right? If true, can that opposite side at some point withdraw causing my short position to be closed? For example, say I have shorted 100ETH, whilst B went 100ETH long, however market conditions turned south and B's stop loss is triggered, would this mean that my 100ETH short position be closed as well if there is nobody who could match it?
How is margin trading pretty safe if the margin trading side of things can buy more value than they're borrowing?
This is my first go at understanding margin trading vs lending. I'm trying to understand all the risks associated with it. I understand if the exchange goes down things can be jacked up, but for the purpose of this discussion lets ignore that scenario. I've searched on YouTube and found some videos, but haven't found anything yet that cleared it up for me. I see a LOT of people say that how Poloniex does it (with the collateral liquidation) makes it almost risk-free unless there's something massive that happens with the price in a very short period. Poloniex's web site gives the following example:
Current Margin: The percentage of your Total Borrowed Value that your Net Value currently is (in other words, Net Value over Total Borrowed Value). Current Margin is a critical value, because if it dips below your Maintenance Margin, your account will undergo a forced liquidation. For example, suppose you have 1.5 BTC in your margin account, and your Maintenance Margin is 20%. Borrowing 3 BTC, you open a long position in the XMR market. Now, in order to avoid a forced liquidation, the Net Value of your margin account must remain above 20% of the 3 BTC you just borrowed, or 0.6 BTC. If the price of XMR starts declining, the amount of BTC you can get by selling the XMR you just purchased diminishes, and you start to incur a loss. This is reflected in your P/L and Net Value. If the amount of this loss, together with the lending fees you owe, reaches 0.9 BTC, the net value of your margin account will be 0.6 BTC (1.5 BTC minus 0.9 BTC in unrealized losses) and a forced liquidation will trigger.
Is this saying that the borrower must maintain a value of at least 3.6 BTC in their margin account? If so, it makes sense why this seems risk-free aside from an issue with the exchange going offline or very steep fluctuation in price...
Cannot understand crypto trading margin positions with different leverage?
I have a question related to margin trading :-
Lets say I buy 2 Bitcoins at $7,500 at 2x leverage.
I sell those 2 Bitcoins at $8,000 at 4x leverage.
How much did I make? If I had bought 2 Bitcoins at $7,500 4x leverage and sold at $8,000 at 2x leverage, how much would I have made? If I had bought 2 Bitcoins at $7,500 4x leverage and sold at $8,000 at 4x leverage, how much would I have made?
Having a basic understanding of margin trading, advantages, and risks is a great first step in the long adventure of cryptocurrency trading. Share this article: Wayne Jones. Wayne is a Blockchain enthusiast and expert in crypto trading. Currently, he covers trendy issues on digital currencies. Margin is a critical concept for new futures traders to understand. When trading futures, margin is essentially a good-faith deposit required to control a futures contract. Futures margin is the amount of money you must have in your brokerage account to protect both the trader and broker against possible losses on an open trade. Trading on margin involves specific risks, including the possible loss of more money than you have deposited. A decline in the value of securities that are purchased on margin may require you to provide additional funds to your trading account. Understanding the Basics of Margin Trading with Cryptocurrency. August 7, 2019 August 31, 2019 Rohit Choudhary. Margin trading with cryptocurrency is complicated and one needs to have more insights on how to go about it. More sophisticated strategies are involved and the platforms used also involve a lot. ... Margin trading on cryptocurrency ... We are issuing this investor guidance to provide some basic facts to investors about the mechanics of margin accounts. We encourage any investor reading this communication to also read Purchasing on Margin, Risks Involved with Trading in a Margin Account.. How Margin Calls Work in Volatile Times. Many margin investors are familiar with the "routine" margin call, where the broker asks for ...
Lesson 2.2 - Understanding Leverage and Margin - YouTube
Get this tool for free: https://www.xm.com/trading-tools In a margin account, traders can take advantage of leverage to trade bigger positions than the value... What is margin trading? What is a margin? What is the difference between a cash account and a margin account? In episode #34 of Real World Finance we dive de... Understanding forex leverage, margin requirements and sizing trades for successful trading. The topic of this week's video will be on Futures Trading understanding margins. There are three types of margins that future traders need to understand and in this video, you will learn about ... Trading 101: What is a Margin Account? Come join me for a live session where I talk more about trading, the markets and all the money that can be made. Claim...