There are lot of opportunities popping up on the internet or business word, lot of skills to learn inorder to make side income apart from the offline work we always do. Even nowadays, people really find it hard to secure an offline job , except they create their own entrepreneur job, most engage in buying and selling of goods and even services to survive. There is one special skills everyone wish they know how to do or really have this zeal to learn. Yes everyone want to trading ( crypto trading or Forex trading ) but to most, this is really a hard skills to master in a short while and most are really scared because this really deal with profit and lost, it can save or ruin. Two different world embedded into one body.
Not everybody have the sufficient capital to trade either in Forex or in crypto and it really not a good thing, but what will man do, we have to keep looking for capital. I still remember when I decided to try out Forex and I only have 13 USD with me, even though I decide to trade with it, I know it have a lot of disadvantages because I won't be able to open many positions and if I try to, It might take me off the market (liquidate) if the market go against me. Back then I always heard about margin trading but have zero knowledge about it, so I couldn't give it a try, I know most have been seeing it also but they didn't understand what it is about. Let move straight to it and have some basis knowledge on margin trading.
This is also called leverage, in this aspect you make use of borrowed money to trade higher value or open positions after deciding if a market will increase (buy) or decrease (sell). You have the access to borrow from the exchange or users (mostly third parties) in order for you to increase your trading capital. I mentioned above I once trade with 13 USD, that is because I have no knowledge about margin trading, I could have apply for one to increase my trading capital which could have create some advantages for me to trade.
When leverage, it have different degree, from 1-100x which serve as multiplier, I mean you deposit will be doubled, let say you are trading on 2x leverage and your initial capital is around 500 USD, that means it will be multiply by 2, so you will be trading with 1000 USD, if it is 3x leverage, it will be your initial capital multiply by 3.
Note that the whole money are not yours, your capital will always remain the same while the remaining is the borrowed money, it have advantages and disadvantages, if the market move as your predict it, you will be on the winning end. Let say you went for a buy and it start increasing in your favour. It increase 3% and you are on 2x leverage, that mean you will be having 6% returns to your capital (the increase% x the leverage you are on). And it is the other way round, it will be 6% lose on your capital without anything affecting the money you borrowed.
There are things you need to look out for before engaging in margin trading, you know you can't just jump in and start trading or you will surely lose your capital, the first and foremost, you will need to have the required skills to trade, because it you don't have the skills, the way the market will drain you is really high. Always look before you leap, analyze well or seek advice from pro traders. Also you have the access to close the trade if it is going against you instead of you waiting for it to take you off the trade and losing all. You can easily reduce the lose my pulling out on time and note, stop loss is very important. Till next time that I will be talking about liquidation, stay safe and take care.
