Margin trading

With margin trading, imagine you have $100 and the exchange allows leverage of 3.3x and your initial margin will be 30%, now you can borrow an additional $233 for a total buying power of $333, so you can buy 3.33 BTC. When the price goes up 10% your profit has tripled to $33 or 33.33%. Using leverage can increase your return.

Initial margin is the minimum amount of Bitcoin you must deposit to open a position.

But with margin trading, there’s an interest rate applied! For example, the daily interest rate can be 1%, your daily interest cost will be $2.33. This interest rate is a variable rate and you will be only able to lock it in for 1 up to 30 days. If you are looking for a long-term trade, the cost of holding your position can destroy you. Especially if the price of bitcoin starts moving against you.