What is Margin Trading?

Margin trading is a trading method that allows traders to trade assets with funds provided by a third party. Compared to regular trading accounts, margin accounts enable traders to access larger sums of capital, giving them the ability to leverage their positions.

Essentially, margin trading amplifies trading results, allowing traders to realize larger profits on successful trades. This makes margin trading particularly popular in low-volatility markets, such as the international Forex market. However, margin trading is also utilized in stock, commodity, and cryptocurrency markets.

In traditional markets, investment brokers usually provide borrowed funds. In cryptocurrency trading, on the other hand, funds are often supplied by other traders who earn interest based on market demand for margin funds. Although less common, some cryptocurrency exchanges also offer margin funds to their users.