Gone are the days when borrowing money from financial institutions were based on reputation. Some would even want you to state your culture, religion, and achievements. But in today’s world, margin trading and technological advancement have evolved, making buying and selling easier.
In a century full of investment options, it’s quite essential to explore different trading strategies. While you’d love to design suitable measures to go long or short in the market, having a glimpse of the market is beneficial. You must know how to place a trade well with a deep knowledge of chart patterns.
This way, you can apply the margin trading strategy. And of course, it is a concept that revolves around borrowing money from your broker to deduce a potential profit return. I’m sure that sounds interesting. Yes, we all love to win! But do you know the risk involved, and can you strike a balance in trading?
As a beginner, you need to learn more about risk management. Placing one or more positions implies that you understand the market trends and are up to date on the latest news, indicator announcements, trading strategies, and FRS interest rate plans, among others. So, how do you get started?
Worry less, as we’ve got you covered on this platform. Have you been practicing on MT4 or MT5 and probably want to consider margin trading? Or you’re into cryptocurrency and would like to check out Binance or Bityard margin trading? In this article, we will walk you through the basics. Continue reading!
Understanding Margin Trading Strategies and How It Works
As I said, margin trading strategies involve borrowing money to control a larger opening or position while trading. Let’s say you have $5,000 on your trading platform. You can request $10,000 margin trading from your brokerage. Not only will you get the money, but you should expect a 50% share in value.
However, many brokers have their terms and conditions to give a margin. While some would set a limit, charge for maintenance, and restrict your account for certain positions, others may not. In this case, you need to understand the risk and leverage your strategy to news and core analysis.
To get started with a margin trading strategy, the first thing to do is to open an account with a broker. Afterward, display the evidence or fund your wallet with the minimum amount. Once this is done, you get your margin trading account automatically. Below is a detailed illustration of how the margin works.
|Margin (Leverage)||Investor’s Traded Amount||Amount Expected (Share)|
|1:1 for beginner||$5,000||50% share = $2,500|
|1:1 for beginner||$50,000||50% share = $25,000|
|2:1 for intermediate||$150,000||50% share = $75,000|
|2:1 for intermediate||$200,000||50% share = $100,000|
|200:1 for expert||$500,000||50% share = $250,000|
Margin Trading Tips for Beginners
In recent times, margin trading has gained popularity across the globe. Here, traders can borrow up to 50% of their capital, with the remaining being deposited in their accounts. In contrast, many traders or beginners struggle to compete by overleveraging in the market. Below are the tips that’d guide you.
Risk Management Is the Best
The best advice to give any trader is to understand risk management before opening a position. When market analysis goes against you, things might get worse, leaving your account liquidated. Remember, you will have to pay your debt. That’s why you need to learn how and when to place a trade.
Avoid Opening More Positions When Losing
I’ve seen many people trying to recover from their losses by opening different positions at a time. In fact, when the red candle begins to slow down, a lot of people still believe there will be a turnaround time. As sweet and painful as this scenario may be, it’s always better to opt-out to avoid liquidation of the margin account.
Avoid Overtrading and Make Trend Your Friend
Among the rules to becoming a successful trader is to make trends your friend. If the market moves in one direction, apply trading tools such as Fibonacci, indicators, support and resistance, and more. Meanwhile, minimize your trade and don’t take advantage of every opportunity you see.
Margin trading is the best approach to capitalize on market opportunities. At the same time, many risks are involved, but buying your position slowly can be profitable. Nevertheless, stick to your trading analogy and strategy, and have a backup fund in case of loss.