VIDEO: Don’t Lose Your Shirt Margin Trading

There’s no quicker way for a trader to lose their shirt than trading on margin without understanding how it works. Margin trading can help you maximize gains and, conversely, maximize your losses.

Margin trading is essentially trading with borrowed funds. When you place a margin order on Poloniex, all of the money you are using is borrowed from other Poloniex users who lend their funds. The assets in your margin account are used only as collateral for these loans and to settle debts to lenders.

You have to pay back the loans. That might not be a problem if the market swings the way you want it to. But if the market moves the opposite way, you might face a margin call or worse a forced liquidation.

A forced liquidation is when all or part of your positions are closed automatically to prevent further loss and ensure you do not default on your loans. It is strongly advised that you check the markets and your open positions regularly, mitigating your risk as necessary by reducing the size of your positions or transferring additional collateral into your margin account. Markets can change very quickly, and no guarantee can be made that you will receive a margin call warning in time for you to prevent a forced liquidation.

For more information about margin trading, please read our lengthy explainer document. For regulatory and compliance reasons margin trading is only available to non-US customers. If you’re a non-US customer, and have taken the time to educate yourself about margin trading, watch the video below to see how to trade using margin on Poloniex.

Non-US customers can trade, at up to 2.5 times leverage with BTC as the base pair, the following assets: EOS, ATOM, XRP, ETH, BCHABC, BCHSV, ETC, XMR, STR, FCT, LTC, BTS, DOGE, DASH, MAID, and CLAM.