How do crypto margin calls work and how can they impact my investments?

3 answers

• e_bOct 30, 2023 · 2 years ago
  Sure! When you trade on margin, you're essentially borrowing funds from a platform to increase your trading position. A margin call occurs when the value of your investment drops below a certain threshold set by the platform. This triggers a request for additional funds to cover potential losses. If you fail to meet the margin call, the platform may liquidate your position to recover the borrowed funds, which can result in significant losses. It's important to closely monitor your positions and manage risk to avoid margin calls.
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• Rishabh SorocoMay 14, 2024 · a year ago
  Crypto margin calls can have a major impact on your investments. If you receive a margin call and can't meet the requirements, your position may be forcibly closed by the platform. This can lead to substantial losses, especially if the market is volatile. It's crucial to understand the risks involved in margin trading and only use funds you can afford to lose. Additionally, it's wise to set stop-loss orders to limit potential losses and have a solid risk management strategy in place.
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• Eric in North HollywoodAug 15, 2020 · 5 years ago
  BYDFi, a leading cryptocurrency exchange, explains that margin calls work by requiring traders to maintain a minimum level of equity in their margin accounts. If the equity falls below this level, the exchange will issue a margin call and request additional funds. Failure to meet the margin call may result in the forced liquidation of positions. Margin calls can have a significant impact on investments, as they can lead to substantial losses if not managed properly. It's essential to understand the margin requirements and closely monitor your positions to avoid margin calls and mitigate potential risks.
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