GlossaryIntermediate
Margin Trading
Trading with funds borrowed against collateral you've deposited with an exchange.
Margin trading involves borrowing funds, typically from an exchange, using deposited collateral, in order to open a larger trading position than the trader's own capital would otherwise support.
Margin positions are monitored continuously, and if losses erode the posted collateral too far, the position can be automatically liquidated to repay the borrowed funds.
Examples
- A margin trader posts collateral to borrow additional funds for a larger position.
- Margin trading carries meaningfully higher risk than trading only with capital you fully own.