Master Margin Calls: Protect Your Crypto Investments Effectively – BitRss

When trading with cryptocurrencies using leverage, the term “Margin Call” becomes crucial. A Margin Call is triggered when the collateral drops below a certain threshold, acting like a warning system to protect your account. If not managed properly, this alert can lead to the liquidation of your assets. Understanding and preventing this risky situation is essential for any trader.

What is a Margin Call and How Does It Work?

A Margin Call is a risk management mechanism used in leveraged trading. Brokers inform you when your collateral falls to a critical level due to losses. This alert serves as your last chance to either close your position or deposit additional collateral. The primary aim is to limit financial losses for both you and the trading platform.

For example, suppose you open a Bitcoin $105,211 position worth $10,000 using 10x leverage. If Bitcoin’s price decreases by 10%, part of your collateral erodes. The system automatically triggers …