Onederx is continuing to share valuable knowledge — our aim is to help beginner traders find their way around the world of futures trading, using the crypto market as an example.

Margin trading is one of the most profitable trading — but also one of the riskiest. The idea is simple: a trader borrows money (usually from an exchange or broker) at a rather high interest rate to increase his or her leverage.

Margin trading is very popular because makes it (theoretically) possible to increase one’s capital dramatically if everything goes well. It is indeed a kind of leverage that multiplies your profits — and your losses, too. When a trader makes a $10 000 deposit with a broker, he or she hopes to earn millions, of course. So the question of getting leverage or not is a formal one rather than practical. Indeed, who would be able to resist a temptation to grow their deposit quickly?

If you are lucky, you can get rich quick, but on the other hand, just one wrong move can ruin a trader — first the exchange will ask that they increase their deposit and then will simply cancel the order, with all the money getting lost.

There are exchanges that offer 1:1 leverage, meaning that a trader can borrow as much as he or she already has. This means that a trader with 1 BTC in their account will trade 2 BTC, increasing the potential profit. Other exchanges offer leverages ranging between 2.5:1, 3.3:1, 20:1 and even 100:1. When trading with 100:1 leverage, you can both earn 500% on your deposit in a few minutes or lose everything in the blink of an eye.

Onederx currently offers 20:1 leverage, but we plan to increase it to 100:1 in the near future. We offer traders leverage when trading in futures, which will be the subject of a separate discussion. Margin trading allows our users to trade actively and to earn more. Having a $1 balance, a trader can open positions of up to $20. Our brilliant risk management system allows fair margins up to 20× without causing any nasty liquidation accidents.

The basics

Let’s take a look at the very basics of margin trading, using the crypto market as an illustration and structuring our explanation as a series of questions and answers. If you’ve never bought any bitcoins or traded them at an exchange, then you might find our explanation complicated; however, beginner traders with even minimal experience will surely figure it out soon.