Potential and risks of MARGIN TRADING.

Once the apprentice has become familiar with the "SPOT" trading and has achieved a good degree of experience, he may wish to deepen the knowledge and possibilities offered by "MARGIN TRADING".

Why is it useful to learn and be aware of the potential and risks of this "derivative instrument" ???

Basically because, being able to operate "Short", you have the possibility of obtaining an hypothetical profit, even during price drops, and not only during price increases, as happens in the classic investments in favorite sectors, favorite assets.

Obviously, this is not possible for an investor who operates only spot, as the spot investor is normally positioned in one direction, and therefore only earns during a shortterm price rebound, or during a phase of rising prices that develops in the time frame of the investment.

For this reason, 98% of hedge funds that have the core base of their operations in the spot, usually carry out "rounds" of investments that last 4/5 years.

This type of time planning, allows them to have a minimum period of time to let the investments to develop.

If in a period the market just goes down, it is evident that in that phase, the spot investor has very little room to trade.

While those who, on the other hand, have the possibility to operate also on margin, could decide to diversify a portion in order to take advantage of any downturn, in order to make a profit even when prices plunge.

Regarding the crypto sector, the best Exchange for Margin trading is undoubtedly BYBIT, which is defined as the "Ferrari" of margin trading and has established itself in this specific niche.

Bybit, which has recently established its headquarters in Dubai, is in fact considered by many, as the best exchange of crypto DERIVATIVES.

Its app is extremely intuitive and user friendly.

All the fundamental features, which offer a wonderful user-experience, are very important to operate with greater serenity.

Functions such as the trailing-stop, the summary screen that automatically shows the liquidation level before entering a market entry, and other small technical details, are all highly appreciated details, which represent a really useful support for the trader.

Another great plus of Bybit is its stability. Never a strange spike, never a malfunction, not even during the most difficult "busy" and chaotic moments of the market.

Over time, Bybit has demonstrated extreme functionality and fairness.

This is important because, unlike the SPOT, in MARGIN trading, exist the so called "liquidation".

But what does this risk called "liquidation" represent?

If the price goes in the opposite direction to the trade beyond a certain extent, even for a nanosecond, the portion of money set aside in that specific transaction is lost forever. It is in fact "liquidated".

Influencing the price level at which this specific position will be liquidated, it also contributes the delicate choice relating to the use of a specific FINANCIAL LEVERAGE.

Through the use of financial leverage (or "financial leverage") a trader has the opportunity to buy or sell a crypto for an amount, which is higher than the capital owned and, consequently, to have a potential return, which is greater than that from a direct return deriving from the underlying.

On the other hand, leverage also expose that position to the risk of losing the portion of money placed on margin, much more easily.

Let's assume that I open a LONG with 100 usd using leverage 10x. If the price goes up by 30% I will earn 300 usd (30x10leverage)

If, on the other hand, the price falls by 10% or more, I will lose the 100 usdt placed "on the margin".

So, it is pretty clear that having an ultra-stable platform is of paramount importance.

Furthermore, a positive aspect not to be overlooked is that fees are very competitive on this exchange.

Compared to other competitors, there is a big difference in this respect.

Subscription to Bybit is very fast as it is one of the very rare exchanges that currently does not require KYC and therefore is much loved by privacy lovers.

The KYC is only required to increase withdrawal limits to over 2 BTC daily.

Bybit is currently a "crypto only" exchange, where therefore there is no possibility to deposit FIAT, but it is possible to deposit only crypto.

In any case, Bybit also allows to operate in PAPER TRADING (demo mode).

Paper trading (also known as demo trading) allows you to trade and buy/sell assets using FAKE MONEY.

The experience, however, is in all respects the same as that with real money, but the risk factor is removed.

Therefore, it is also possible to practice with this tool for free, without risking anything.

Indeed, currently you can take advantage of those welcome bonuses and even more competitive fees that can be used by registering via the following link: https://www.bybit.com/en-US/depositblastoff/?affiliate_id=8099

As you may have guessed, margin trading is an instrument with an interesting potential, but which at the same time needs to be thoroughly understood in its various details, in order to "minimize" the risks and most importantly OPTIMIZE OPPORTUNITIES.

Unlike the SPOT trading, in fact, certain misunderstandings and shortcomings relating to the instrument, or improvisations, could be lethal in the margin, where there is liquidation.

If you want to deepen the study of "margin" trading, learning "tips & tricks "currently working in the markets, and observe in real time the educational setups dedicated to this specific instrument, we invite you to subscribe to our Academy LSMasterTradingSystem, where you can easily assimilate how to properly use this tool.

You can also get in touch with us through the following official channels:

Official FB:

https://www.facebook.com/LSMasterTradingSystem

Official IG:

https://www.instagram.com/ls_master_trading_system/

We will now go into more detail with a functional and compact guide, useful for setting Bybit in the best possible way in order to make it perform at its best: