You may already be familiar with exchange trading that is available on most crypto exchanges, including CoinMetro.
When an exchange order 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.
Margin trading works differently. You place an order to buy or sell a particular asset against another as with exchange trading, but with two main differences:
- Leverage can be used (up to 3:1 in our case) to amplify potential gains and losses;
- When the order is filled your wallet balances do not update yet.
Instead an open position is created which has a floating profit or loss (P/L) that automatically updates as market prices change. When the position is closed at your discretion, the floating P/L is converted to a settlement currency (eg EUR or BTC) and saved to your wallet for that currency.
The main differences between the two types of trading can be summarised as follows:
In summary, margin trading provides the most flexibility if your main goal is to generate profits with added leverage. If you instead want to purchase cryptos for long term holding and/or for trading without the risk to rewad ratio, leverage implies, then the different deditcated exchange sections and trading would be more suitable for you.
If you have any other questions for us, please don't hesitate to contact us.
-CoinMetro's Customer Support