Margin trading explained: how trading with borrowed money works

The information provided in this article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry a high degree of risk. Always conduct your own research.Margin trading means trading a larger position with borrowed money. We work through profit and loss at 2x, 3x and 5x leverage, explain margin level, margin call and liquidation, and show where you can trade with a licence in the EU.Little capital of your own carries a large position: the principle of margin trading. Illustrative image, AI-generatedAdd as a preferred source on GoogleFollow on Google NewsMargin trading means using borrowed money to trade a larger position than your own capital allows. Your stake serves the platform as collateral, the margin, and it lends you the rest against interest. With €1,000 of margin and 3x leverage you move Bitcoin worth €3,000: if the price rises by 10 percent, you make €300 instead of €100; if it falls by 10 percent, you lose €300. In Germany margin trading is allowed but limited for retail clients: crypto CFDs may carry leverage of no more than 2:1, while margin trading on EU-licensed crypto exchanges goes up to ten times. This guide exp...