What is the meaning of used margin in the context of cryptocurrency trading?

1 answers

• May 13, 2022 · 3 years ago
  In the context of cryptocurrency trading, used margin is the amount of funds that a trader has already used to open a leveraged position. It's a way for exchanges to ensure that traders have enough skin in the game and can cover potential losses. When a trader opens a position, a portion of their account balance is locked up as used margin. This means that the trader cannot use those funds for other trades until the position is closed. If the position goes against the trader and the losses start eating into the used margin, the exchange may issue a margin call, asking the trader to either add more funds or close the position. Used margin is an important factor to consider when trading with leverage, as it directly affects the trader's risk exposure and potential profits or losses.
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