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Margin

Why did I fail?How many traders do you think ask this question to themselves? Well, if we dig deeper into statistics, we’ll see that #1 reason differentiating successful traders from the rest 90%+ is proper use of margin and leverage. For every $50,000 in their account, most experienced forex traders and money managers trade one standard lot. If they traded a mini account, this indicates that for every $5,000 in their account, they trade one mini lot. Allow it to soak in for a couple of moments. Why do less experienced forex traders believe they can win by trading 100K standard lots with a $2,000 account or 10K micro lots with $250 if professionals trade like this? Never open a "regular account" with only $2,000 or a "micro account" with $250, no matter what the forex brokers tell you. Some even enable you to start an account for as little as $25! The number one reason rookie traders fail is because they are undercapitalized from the start and have a poor understanding of how leverage works. However, this all also goes back to our previous lessons on figuring out what type of trader you are. For instance, we’re slightly more aggressive (and as our SL are usually extremely tight), we stick with 1% (which still allows us to open 2 lots for 50.000$). However, if you have hard time monitoring the trade or prefer to have more “breathing room” for a trade, consider 1 lot for 100.000$ of your trading capital. All the best and stay safe, fam!
BITSTAMP:BTCUSDEducation
by Investroy
6
BTC September Historic dataLooking at the past doesn't guarantee certainty for the future, but it can give us a good idea of what might happen. Looking into the price action of the last 8 years of Bitcoin's history, we can see that the performance is not that great. The price action in September has been either sideways, or sideways with some downwards momentum. Comparing the historical data to predict the future, it's possible that mean reversion strategies could yield good performance while challenging the trend following strategies. On the other hand, in the past, we don't see high values of market noise which is great for breakout strategies. If we dig deeper into the lower time-frames there are clear trends and smaller breakouts. (This would be another opportunity for lower time frame strategies). September will be an outstanding test for the different strategies because market cycles, so far, have shown different behavior than in prior years. Pre-Sep 2021 Insights: BTC didn't have a significant rally since the dump of May/June, however, there is RSI divergence (slowing momentum), and MACD was still bearish; on the other hand, BTC will face the ATH wall soon. Last year, before September we had a strong move that ended up with a correction and choppy market conditions in September. There are some similarities between pre-September of 2021 and the other years, for example, RSI divergence, strong moves in prior months. It will be interesting to see how it will play out and if the similarities will keep up. Explanation per Year: 2020 In 2020 after the March dump, BTC had a strong rally until August and September was the cooling-off of that move. Also, the RSI continued making lower highs while the price was making higher highs, giving the indication of a trend reversal. 2019 Sept 2019 had a different story but the outcome was kind of similar. Dec2018 to March 2019 we saw the accumulation phase after the bear market and when the price started to move the rally was almost vertical; Vertical moves are emotional moves and normally don't last long. September arrived while prices keep falling to make higher highs and end up with a dump in September. The market structure from 2019 differs from 2020 but the outcome is similar, sideway-move and/or crash 2018 In 2018 we came from the 17 Dec 2017 ATH right at the end of the bear market. Price tried to break the EMA21 week and failed, giving continuation to the bear market. Price once again was choppy after a small rally confirming EMA21 week as resistance (once again). 2018 situation was different from 2020 and 2019 but the September outcome was similar. 2017 In 2017 the similarities are probably more noticeable since we were in the middle of the bull market preparing for the last move. On the other hand, in 2017 there was no death cross and we didn't see the price action going below the EMA21 week, not MA 200. The move from March to August was strong, way stronger than in 2021, but we had the correction here and the RSI divergence was there as well. 2016 In 2016 BTC was right in the middle of the bull market and after a rally, the price came to the mean support areas and consolidate over September after a good V shape recovery.
BITSTAMP:BTCUSD
by Tuned_Official
Spot Trading vs Margin Trading Pros and ConsSpot Trading is the most basic form of trading method and is the most suitable for beginners in trading. It's simply a BUY > HOLD > SELL mechanism. On the Other Hand Margin Trading is complicated and should only be done by experienced traders. There are various components to margin trading such as Maintenance margin, margin calls, leverage, and liquidation. Pros and cons of Spot Trading 👉Spot trading is easy to learn and understand and is a good starting point for beginners in Trading. 👉It's an easy process to manage risk in spot trading not taking all the complications of liquidation or margin calls. 👉You can hold an asset for a much longer time and in the case of cryptocurrency can also transfer to any cold wallet. 👉No Trading happens during downtrends. 👉The potentials gains are not very good on a smaller investment amount. Pros and cons of Margin Trading 👉Margin Trading needs some advanced knowledge of various things such as margin calls, liquidation, leverage, etc. Hence it's not recommended for new traders. 👉You can make profits on both uptrends(by going LONG) and downtrends(by going SHORT). 👉Gives an ability to trade much larger amounts with a relatively small initial investment by using leverage. 👉Margin Trading is risky, and if not done properly can blow your account in a very short time span. 👉Profits are higher when utilizing margin trading, and so are the losses. Every exchange has its own rules for margin trading, which need to be understood carefully before investing. Thanks for reading and what kind of trading technique do you use and why? Share in the comments below. For more similar educational ideas, scripts and trend analysis follow us. Happy Trading.
Editors' picks
Education
by Tuned_Official
22
📚 Leveraged & Margin Trading Guide + Examples ⚖️ Leveraged trading allows even small retail traders to make money trading different financial markets. With a borrowed capital from your broker, you can empower your trading positions. The broker gives you a multiplier x10, x50, x100 (or other) referring to the number of times your trading positions are enhanced. Brokers offer leverage at a cost based on the amount of borrowed funds you’re using and they charge you per each day that you maintain a leveraged position open. For example, let's take EURUSD pair. Let's buy Euro against the Dollar with the hope that the exchange rate will rise. Buying that on spot with 1.195 ask price and selling that on 1.23 price we can make a profit by selling the same amount of EURUSD back to the broker. With x50 leverage, our return will be 50 times scaled. With the leverage, we can benefit even on small price fluctuations not having a huge margin. ❗️Remember that leverage will also multiply the potential downside risk in case if the trade does not play out. In case of a bearish continuation on EURUSD, the leveraged loss will be paid from our margin to the broker. For that reason, it is so important to set a stop loss and calculate the risks before the trading position is opened. ❤️Please, support this idea with a like and comment!❤️
Editors' picks
OANDA:XAUUSDEducation
by VasilyTrader
26
📚 Leveraged & Margin Trading Guide + Examples ⚖️ Leveraged trading allows even small retail traders to make money trading different financial markets. With a borrowed capital from your broker, you can empower your trading positions. The broker gives you a multiplier x10, x50, x100 (or other) referring to the number of times your trading positions are enhanced. Brokers offer leverage at a cost based on the amount of borrowed funds you’re using and they charge you per each day that you maintain a leveraged position open. For example, let's take EURUSD pair. Let's buy Euro against the Dollar with the hope that the exchange rate will rise . Buying that on spot with 1.195 ask price and selling that on 1.23 price we can make a profit by selling the same amount of EURUSD back to the broker. With x50 leverage , our return will be 50 times scaled . With the leverage, we can benefit even on small price fluctuations not having a huge margin. ❗️Remember that leverage will also multiply the potential downside risk in case if the trade does not play out. In case of a bearish continuation on EURUSD, the leveraged loss will be paid from our margin to the broker. For that reason, it is so important to set a stop loss and calculate the risks before the trading position is opened. ❤️Please, support this idea with a like and comment!❤️
OANDA:XAUUSDEducation
by VasilyTrader
14
Whats Next For Bitcoin...By running a Stochastic through Inphase-Quadrature frequency transform and smoothing it with ZLSMA (Zero Lag Least Squares Moving Average) we can get a good picture of the current position of Bitcoin. It appears BTC has nearly finished consolidating its low point and should be bouncing up in to a bull trend. The chart above and below is using macZLSMA from multiple timeframes including monthly, 2 weekly, weekly, daily and 12 hourly. ZLSMA is an excellent tool to find early trend directions/pivots. It does look like bitcoin is making its comeback but we can not forget that BTC is in a heavy down trend and the road out is a rough one full of pumps and dumps. One thing is certain and that is the institutions will be dumping on bitcoin soon as there is any public momentum to get on board. Institutions have been having a field day scooping up the positions from traders with excessive leverage and short stop-losses which in turn pushes the price down harder. To get around this margin traders can easily find tops and bottoms on longer timeframes such as the 2 hour and ride them with 10x leverage for 8-12 hours. A strategy like this means traders can trade both directions with the trend (short and long) regardless of what the institutions are doing. Be prepared for lots of dumps in the future and don't forget to take profits along the way. Using an oscillator such as a Stochastic RSI on the 3 hour chart traders can see dumps coming, exit their longs and enter a short, betting with the institutions snatching up the positions they were hunting. Happy Trading.
BNC:BLX
by veryfid
6
Importance of Optimizing RSI Calibration with NINJASIGNALS V4This is a great example of why it is helpful to scan through multiple RSI Calibration values when calibrating Ninja Signals V4 to fit a given chart. Different currency pairs and candle sizes often require different RSI Calibration values to maximize trading success. Often times, different RSI Calibration values may result in a significantly higher net profit, win-ratio, or both. In this particular example, we found that using a small RSI Calibration value of 2 resulted in both a significantly higher net profit and win ratio. We typically use RSI Calibration values of 2-12 when fitting Ninja Signals V4 to a chart. Smaller RSI Calibration values result in a larger number and frequency of trades, whereas larger RSI Calibration values result in a smaller number and frequency of trades. We hope you find this helpful and informative. Feel free to send us a message on TradingView if you have any questions. Happy Trading! Ninja Signals V4 (Script) Ninja Signals V4 (Strategy)
Education
by Bitcoin_Ninjas
1
Using Obscure Candle Sizes to Maximize Profit w/ NINJASIGNALS V4This is a great example of how effective a small change in candle size can be when using our Ninja Signals V4 trading script. By simply switching from 1h candles to 67m candles, we were able to achieve significantly better results. In theory, this will also help to minimize price slippage during live trading by avoiding popular candle sizes (e.g., 1h candles) when many traders attempt to open and close positions at the same bar close time. A small adjustment in candle size can make a big difference when using various indicators. Sometimes standard candle sizes also result in less obvious trends, making it harder to find the best buy and sell points. If your target candle size is 1h candles, we recommend comparing all candle sizes from 40m through 100m in 1m increments (40m, 41m, 42m... ...98m, 99m, 100m, etc.). The small amount of time required often pays off with significantly better, more profitable results. Ninja Signals V4 (Script) Ninja Signals V4 (Strategy)
Education
by Bitcoin_Ninjas
selby_exchange - Selby Margin Trading Rules v1.1Selby Margin Trading Rules 1.1 1.Trading Working Hours: 01:00UTC Monday thru 21:00UTC Friday take off all weekends and holidays. Only begin margin trading after 30 minutes of reviewing all instruments and timeframes. 2. Margin Forecasting: Charts are built on the 11/15min. using data from Heikin Ashi candle wicks. Identify entry/exit on the 1,2,3min. chart using moving average crossover intersections based on the Fibline Glance indicator set to: 100,100,0.1,40,0.1 3. Risk management: Maximum leverage on any position long or short is 70X. The position size should be based on weekly "working capital" and not total life savings. Formula for position size is a 5X position can use up to 95% and a 70X position can use up to 30%. 4. Enter limit order long/short and then set limit exit to take profit (TP) at the next short term Fibonacci level. Moving average crossovers in higher timeframes 14,21,33,48min. the 1-6hr. and 1day will confirm market direction for successful trade. 5. "THINGS TO AVOID" Greed - Bragging - FOMO 6. -2%-20% RULE: Always close negative positions. Look for a retrace opportunity to exit but if trade falls below (-2% on a 5X) or (-20% on a 70X) for more then 30min. set a stop loss limit order to prevent loss of time and a potential liquidation. 7. 60/40 Split: To maximize margin profit, stay out while awaiting confirmation of market direction, the entry must be caught at the Fib. Think/Chart 3-steps ahead, do not rush yourself into a position. Wait a few minutes between entry/exit. "3-Strikes" If you have three bad trades during the workday stop for 24hrs. 8. (TP) TAKE PROFIT: Cash-out at the end of the week into btc/fiat and pull 10% of net gains out of cyberspace forever. Work as long as you like on any day during the week, but remember not every day of the work week is always a good trading day. Selby finding creative patterns in charts on Tradingview Not advice for investing, but I am one to watch Rebellion=Change=Future
COINBASE:BTCUSDEducation
by selby_exchange
3
Trading With MarginI’m Markus Heitkoetter and I’ve been an active trader for over 20 years. I often see people who start trading and expect their accounts to explode, based on promises and hype they see in ads and e-mails. They start trading and realize it doesn’t work this way. The purpose of these articles is to show you the trading strategies and tools that I personally use to trade my own account so that you can grow your own account systematically. Real money…real trades. Let’s talk about trading with margin. What is margin? Who should trade with it? Should YOU be trading with it? You see, when used correctly, margin can be your best friend, but when used incorrectly, it can be a disaster. Leverage is a double-edged sword, and it can work for you as well as against you. This is why I want to show you the responsible way to trade on margin. So let’s get. What IS Margin? So first off, what the heck is margin? Well, when opening a trading account, you can open a cash account or a margin account, but what is the difference between the two? With a cash account, if you put $10,000 into the cash account, it means that you have $10,000 in buying power, meaning that you can buy stocks and options for $10,000. Now, when you have a margin account, the difference is when you’re putting $10,000 in cash in there, the broker will actually lend you another $10,000. So in total, you’re getting $20,000 in buying power. How To Open A Margin Account This is how you open a margin account, with tastyworks because this is the broker that I personally use, & I have four active accounts with them. So when you go to tastyworks, it asks what kind of account do you want to open? Is it an individual account, an entity/trust, or a joint account? Then they will want to know what kind of account you want to open. Do you want to open a margin, cash, or retirement account? So with a cash and retirement account, this is where the broker does not lend you money. So whatever cash you have in there, this is what you have in buying power. However, when you use a margin account, you’re getting 2:1 buying power. Buying Power: Stock vs Options When it comes to buying power, there are two things that you need to know. First is there is buying power for options, and buying power for options is always non-leveraged. So if you put $10,000 in cash, even in a margin account, it means that you have $10,000 in buying power for options, and I’ll explain to you in a moment why that is. And then we also have buying power for stocks, and here this is where margin kicks in. So $10,000 in cash will give you $20,000 in buying power for buying stocks. There’s also something called portfolio margin, and we will talk about this in just a moment, but I first want to show you exactly what it means here to have the buying power for options and to have the buying power for stocks. How To Use Margin The Right Way So I want to give you here a very specific example for Apple AAPL , and we first want to look at what happens if you want to sell, while trading The Wheel. So let’s just say that you want to sell the 125 put for AAPL . What does that mean? It means that if you’re selling the put, you might be forced to buy AAPL at $125 a share, and for each put option that you’re selling, you would have to buy 100 shares of AAPL . So this means that you would have to bring $12,500 to the table per contract, right? Now here’s the deal. When you’re selling options, the broker is already giving you a discount. So let’s see how much the broker is charging us if we want to sell a 125 put for AAPL . So for AAPL I’m just choosing next week’s expiration because at this point the expiration and the price don’t matter right now, because all I want to show you is how much buying power is needed if I were to sell 1 put. So the buying power that will be reduced from your options is $2,202. So as you can see, if you are buying AAPL at 125, you would have to bring $12,500 to the table, but here the broker is only charging you $2,202. Now again, we want to assume a $10,000 account because this is what many people are starting with. So on a $10,000 account, theoretically, you could sell 4 of these options, and for this, if we are doing this, and edit our order to sell 4, we see that the broker will charge you $8,783. So on a $10,000 account, at first it seems that you have enough margin for this. Wrong! Don’t do that! So this is where we talk about the responsible way and the irresponsible way to do this. So when you do this, this would be irresponsible. So here is what I think you should do. Remember, on a $10,000 account, you’re actually getting $20,000 in buying power for buying stocks. So you have $20,000 for buying stocks, so if you are selling one option, and you would get assigned, then you would have to buy stocks for $12,500 and you still have $7,500 left, right? This is why you should only sell one option, even though your broker will only charge you $2,205 because if you’re assigned, you would have to bring $12,500 to the table. The good news is you have that because the broker gave you $20,000 in buying power. So this here is the right way to do this, and the right way means that you’re not over-leveraging yourself. How To Use Margin The Wrong Way So here’s what would have happened if you would have sold 4 options and got assigned. Well, in this case, you would have to bring to the table 4 times $12,500, so this is $50,000, but you only have $20,000 in buying power. So there’s a difference. So if you take the $50,000 minus the $20,000 that you have in buying power, you are $30,000 short, and these $30,000 become a so-called margin call, and these are the dreaded margin calls that you sometimes hear traders talk about. A margin call means that right now you have to wire the broker $30,000, which you probably don’t have, right? If you don’t do this, he will sell 300 of your shares. So you’re still technically fine if you have less than the $20,000. He probably sells a little bit less so because he wants to make sure that you are just overcoming this shortage. Portfolio Margin There's also portfolio margin. What the heck is the portfolio margin? Well, the portfolio margin is for bigger accounts, and when I say bigger accounts, it really depends on the broker. You see, some brokers request at least $100,000 in your account. Others request that you have at least $150,000 in your account, and even others request that you have $175,000 in your account. It really depends on your broker. Now, however, if you have the required minimum in the account, you can apply for portfolio margin. Why would someone be interested in doing this? Well, portfolio margin basically means, & again, it depends on the broker, that you are getting a 5:1 or a 6:1 leverage. It means that if you have let’s say $200,000 in cash in an account, it becomes a million dollars in buying power, or depending on the broker, it could even become $1,250,000 in buying power. So now you have a lot of buying power, and again, you have to use this responsibly. Just because the broker is giving it to you, you shouldn’t use all this. So the same principles for me personally, apply like if I were using a 2:1 margin account. I personally use this “excess buying power” when things go wrong when I need to save a trade that is in trouble. So this is when I have to fly a rescue mission. Summary Well, first of all, it is super important that you understand what margin is, what buying power is, and then that you also understand that your broker is only charging you a small amount when you are selling options. Don’t overleverage yourself, because when you do this you’re getting the dreaded margin call, and when you are getting the dreaded margin call you have to either wire money into the account, and this pretty much right away, the broker usually gives you 24 hours. Some brokers might be generous and give you 48 hours, but usually, it is within 24 hours. If you don’t wire the shortage to your broker, he will sell your shares until the margin requirement is met. So you lose full control and you don’t want to do this. Anyhow, I hope this has been helpful.
TVC:NDQEducation
by rockwelltrading
ADA/BTC 1D (Binance Spot) Falling wedge on support#Cardano is getting ready for reversal here since the support seems to be holding so far. It's too early to call for a breakout, but at least a pump to wedge resistance is highly probable! You can trade it on Spot or in Margin but be careful with liquidation price if you decide to do so... Current Price= 0.00000673 Buy Entry= 0.00000678 - 0.00000642 Take Profit= 0.00000737 | 0.00000824 | 0.00000919 Stop Loss= 0.00000596 Risk/Reward= 1:1.2 | 1:2.56 | 1:4.05 Expected Profit= +11.67% | +24.85% | +39.24% Possible Loss= -9.70% Fib. Retracement= 0.236 | 0.5 | 0.786 Margin Leverage= 1x | 3x | 5x Estimated Gain-time= 1080h
Long
by TradingOn
0049 - Short DASH on MarginPrecio de Entrada: 63.45 USD Stop-Loss: 71.60 USD Objetivo Mínimo: 42.30 USD Objetivo Máximo: 33.00 USD Nivel de Riesgo: 1% Razonamiento: - Setup super sencillo. Precio de entrada justo por debajo del soporte señalado en los $65. La operación seria ejecutada con una orden stop-sell al precio indicado. Estaríamos operando un breakdown. - Stop-loss por encima del ultimo swing high. Ahí se invalidaría la idea. Sin misterios ni complicaciones. - Objetivo mínimo: El low del 12 de Marzo. Nos brinda una R:R bastante razonable. - Objetivo máximo: El low del 13 de Marzo que, a su vez, es el low del 2020. Seria el primer retest desde entonces. Esperen demanda allí. -
BITFINEX:DSHUSDShort
by IsaacAsimov
5
0045 - Short Ethereum on MarginPrecio de Entrada: 359.60 USD Stop-loss: 403.30 USD Objetivo Mínimo: 256.95 USD Objetivo Máximo: 220 USD Nivel de Riesgo: 1% Razonamiento: - Precio de entrada es venta a mercado. Mientras publico el precio se aleja un poco. Disculpen eso. La entrada se activa por cierre de vela diaria por debajo del open de la anterior (12-Sep). Adicionalmente, invalido con rapidez breakout del setup previo a 4H (ver idea relacionada). Espero ruptura del mínimo de la vela que acaba de cerrar (13-Sep) para pasear en modo dump. - Stop-loss bastante sencillo: Por encima del swing high recientemente marcado. Ligeramente por arriba. - Objetivo mínimo: Nivel invertido siguiente alrededor en los 254 USD. El objetivo esta un poco antes. - Objetivo máximo: Siguiente nivel invertido alrededor de los 220 USD. Sin misterios. Hecho simple. Entendible. PD: Vamos en corto, pero no olvidar que esto equivaldría a operar la corrección a semanas. Se ajustara el stop sin miramientos cuando sea necesario.
BITMEX:ETHUSD.PShort
by IsaacAsimov
6
ADA/BTC 2D (Binance Spot) Parabolic curve on supportCardano is looking very promising for mid-term and bull trend should resume soon. Also, 100EMA seems to be holding the price, as long as we are above it we should keep up. You can operate it on Spot or Margin with low leverage (up to 5x). Current Price= 0.00001030 Buy Entry= 0.00001040 - 0.00000966 Take Profit= 0.00001248 | 0.00001443| 0.00001782 Stop Loss= 0.00000807 Risk/Reward= 1:1.25 | 1:2.24 | 1:3.97 Expected Profit= +24.43% | +43.87% | +77.67% Possible Loss= -19.54% Fib. Retracement= 0.5 | 0.786 | 1.272 Margin Leverage= 1x | 3x | 5x Estimated Gain-time= 2160h
Long
by TradingOn
2