Bitcoin Leverage Example and Margin Trading Examples and Example

Margin required : It's amount of money your crypto broker requires from you to open a position. It is expressed in percentages.

Equity : It is total amount of capital you have in your trading account.

Used margin : amount of money in your account which has already been used up when buying a bitcoin trading contract, this contract is the one that's displayed in open trades. As a trader you can't use this amount of money after opening a trade because you have already used it and it isn't available to you.

In other words, because your broker has opened up a position for you using capital you have borrowed, you must maintain this usable margin for your trading account as a security to allow you to continue using this bitcoin Leverage Example he has given you.

Free margin : amount in your account which you can use to open new trade positions. This is the amount of money in your trading account which has not yet been bitcoin Leverage Examples because you've not yet opened a trade with this money - this is also very important for you as a investor because it enables you to continue holding your open transactions as it will be explained below.

However, if you over use Leverage Example, this free margin will drop below a certain percent at which your broker will have to close all your positions automatically, leaving you with a big loss. The broker at this point automatically closes all your open trade position because if your trade positions are left open broker would lose the money you'll have borrowed from them.

This is why you should always make sure you've a lot of free margin. To do this never trade more than 5 percent of your account, in fact 2 percent is recommended.

Difference Between Bitcoin Leverage Example Set by the Broker and Used Bitcoin Leverage Examples

If the set bitcoin Trading Leverage Example is 5: 1, it means you can borrow up to 5 dollars for every dollar you have but you do not have to borrow all the 5 dollars for every dollar you have you can decide to borrow 2:1 or 3:1. In this case even though the option set 5:1 your used bitcoin Trading Leverage Example will be the 2:1 or 3:1 that you have borrowed to make a trade.

Example:

You have 1000 dollars (Equity)

Set 5:1

Bitcoin Leverage Example Used = Amount used /Equity

If you buy trades equal to 2,000 dollars you will have used

= 2,000/1000

= 2:1

If you buy cryptocurrency trades equal to 3,000 dollars you will have used

= 3,000/1000

= 3:1