Before we dive deep in to Margin Trading or Leveraged Trading in Crypto Currencies let me give a briefing about what margin trading is. Many Stocks, Coomodity, Forex and Crypto Brokers / exchanges offer margin trading up to 1:1000. Higher the leverage, higher is the risk. Margin trading is nothing but borrowing money from broker while purchasing an asset and returning the same at the time of square off. In Forex or Currency Trading some brokers offer up to 1:1000 leverage. That means with US$ 100 investment, you can buy a currency pair worth US$ 100,000. If you use such a high leverage, your holding capacity remains only for the deposit you have invested. If the loss touches $100, broker will square off the position (mostly just before the loss reaches your deposit value) Ideally 1:10 leverage is safer to use if you are an expert trader and know where to keep stop loss and if you are ready to let the profits run.
It's a bitter truth that almost all the traders who get in to margin trading lose money, some within a day and some within few months or a year. People who mamke money in marging trading is less than 1%. Many traders make money in the beginning. You can call it beginner's luck but eventually almost all the traders lose. Leveraged trading is pure gambling and brokers encourage you to get in to leveraged trading because traders make brokers rich. Millions of traders around the world have lost huge amounts in leveraged trading. Many greedy investors have committed suicide and it has also given opportunity to scammers to con people with various get rich quick ponzy schemes.
Margin Trading is not allowed in India for Stocks, Commodity and Forex Trading. Since the Crypto trading is not regulated in India, some Exchanges like Coin Switch Kuber and Coindcx are offering leveraged trading to Crypto investors in India. Investors are strictly advised to stay away from such brokers. When Indian parliament passes the bill to regulate crypto currency trading which is likely to happen any time soon, they may ban leveraged trading.
We need minimum of 5 years of downtrend Most of the brokers who offer leveraged trading just don't trade at all. They don't really earn from commissions which is too small. They are sure that investors are going to lose. So, your trades just remain on paper. Whatever you invest is the income of the broker. Whatever you withdraw is the expense of the broker. When an investor loses all the capital, the capital goes straight in to the broker's pocket. Illegal or unlicensed brokers who operate such trading are called bucket shops and licensed brokers or exchanges are called Market Makers.
Currency called Solana have turned it in You might have read about trading contests from brokers? Brokers encourage traders in the name of trading contests to over trade and lose money. When you receive an email with such offers, you just have to click on delete. There are 101 different tricks brokers may play so that investors lose money. Even the smartest of traders can fall prey and lose money.
Investors need not think that all brokers or exchanges are crooks. There are many genuine brokers who earn money only from commissions. Identifying such exchanges is not so easy. Say no to Exchanges or Brokers who offer Margin Trading
Investors need not think that all brokers or exchanges are crooks. There are many genuine brokers who earn money only from commissions. Identifying such exchanges is not so easy. Say no to Exchanges or Brokers who offer Margin Trading