Understanding the risks of disposal in margini trading: Cryptoma guide
The world of cryptocurrency trade has become increasingly popular in recent years, and many people are trying to invest and profit from this rapidly developing market. Like any other form of investment, however, crypto -trading is provided with its own series of risks and challenges. One of the most important risks is the potential of disposal in margin trading.
What is the trading margin?
Margini trading allows you to borrow a part of your account balance to increase its market exposure. This means that if the cryptocurrency value is increased, their position may become more rare and potentially worth the amount they borrowed. Conversely, if the currency value is reduced, their position becomes less rare and may even be forced to sell in loss.
liquidation in margini trading
When the trader’s margin description drops below a certain threshold, known as the level of liquidation, the intermediary company automatically closes its positions to prevent further losses. This is what we call liquidation in margins. If a trader borrowed a large amount of money to buy or hold cryptocurrency, it may not be able to cover the costs if the price drops significantly.
Risks of disposal in marketing trading
The liquidation may be disastrous for traders who are not ready or underestimated their exposure to the market volatility. Some risks associated with the disposal of margin trafficking include:
* Losses : If a trader is unable to sell his position at a reasonable price, he will undergo considerable losses.
* Call of Margin : The margin call occurs when an intermediary company discovers that the salesman’s account balance has fallen below the level required to close the position. This can cause forced disposal and potentially serious loss.
* Sold commissions for making orders : Merchants who are unable to sell their position may be a commission that can increase the total cost of bargaining from their intermediary for making a trade.
* Failed margins : In extreme cases, traders who have borrowed too much money, or whose positions are highly speculative, may experience the collapse of margins in which their positions decrease, leading to further losses.
specific risks for cryptocurrency
While the disposal of margini trading applies to all types of cryptocurrencies, some risks are more relevant to certain activities than others. For example::
* Bitcoin : Bitcoin is one of the hottest and most stable goods on the market, which means that a sudden recession may not be so catastrophic.
* Ethereum : Ethereum is another highly liquid source, but its price is known to experiment with significant oscillations in recent years.
* Altcoins : The crypto market is relatively new and some Altcoins are still subject to volatility. This can make it difficult for the operators to predict when their positions are liquidated.
To mitigate the risk of disposal
While liquidation is a risk of margins, there are steps that operators can take to alleviate the following risks:
* Diversification : The spread of investments in multiple activities and markets can help reduce the exposure of any particular activity.
* Determination of realistic expectations : Operators should have realistic expectations of possible income from their investment and be prepared for losses.
* Use of arrest orders : arrests orders can help limit losses if the trader’s position drops below a certain level.
* Market Terms and Conditions Monitor : Beware of market conditions and customize business strategies according to needs that can help operators predict and prepare for disposal.
Conclusion
The disposal of margini trading is a risk that all cryptomena operators must be aware of.