How does margin calls work in the world of cryptocurrencies?

1 answers

• Sevo YektirApr 17, 2024 · a year ago
  Margin calls in the world of cryptocurrencies are an important aspect of trading on exchanges. When a trader uses leverage to open a position, they are essentially borrowing funds from the exchange. If the value of the trader's position starts to decline and reaches a certain threshold, the exchange will issue a margin call. The trader will then have to either deposit additional funds into their account or close some of their positions to meet the margin requirements. Failure to do so can result in the exchange liquidating the trader's positions. Margin calls are designed to protect both the exchange and the trader, as they help to prevent excessive losses and ensure the stability of the market. Traders should always be aware of the margin requirements and closely monitor their positions to avoid margin calls.
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