Margin trading is a form of trading that allows you to trade with borrowed assets. Here at Coinmetro, we even offer the use of leverage which allows trading in larger value than your available funds. It also allows you to short (sell) assets you don’t own, in anticipation of buying them back later at a lower price and keeping the difference as profit.
CoinMetro's Margin Trading Platform
How does it work?
When you make a trade on the Coinmetro Margin Platform, you simultaneously buy one asset and short (sell) another. For example, if you buy BTC/EUR, you are buying BTC and shorting EUR. If you sell BTC/EUR, you are shorting BTC and buying EUR. The amount that you “short” is automatically borrowed from CoinMetro or other lenders, and paid to the trade counterparts.
On the Coinmetro Margin Platform, this is handled automatically behind the scenes. You pay interest on the borrowed amount while the trade is still open, but this cost is usually small in comparison to trading profits and losses. Once the trade is closed, the borrowed funds are automatically repaid.
What is the difference between Margin and Exchange Trading?
When an order on the Exchange Platform is filled, you exchange a specified quantity of one asset with a quantity of another asset and your wallet balances for the two assets update immediately.
When you margin trade, you place an order to buy or sell a particular asset against another; but when the order is filled your wallet balances do not update. Instead, an open position is created which has a floating profit or loss (P/L) that automatically updates as market prices change.