Margin Trading
Trading with borrowed funds, posting collateral to open positions larger than your account balance alone.
Margin trading means borrowing from the exchange to size up. Your own funds act as collateral, called margin, and the exchange lends the rest. It works for both directions: go long if you expect a rise, short if you expect a fall.
The borrowed money carries interest and a hard rule. If the trade moves against you and your collateral falls below a maintenance threshold, you get a margin call or an automatic liquidation. Newcomers often underestimate how little a move it takes to get there at high leverage. Margin magnifies every outcome, including the bad ones.
Related terms
Borrowed money used to control a larger position than your own capital would allow, amplifying gains and losses.
LiquidationThe forced closing of a leveraged position when losses drop its collateral below the required minimum.
Long PositionA bet that an asset's price will rise, profiting as it climbs and losing as it falls.
Short PositionA bet that an asset's price will fall, made by selling borrowed coins to buy back cheaper.