Understand the risks of the margin’s separate margin in cryptocurrencies
The cryptocurrencies over the years have been a significant popularity and many investors are trying to take advantage of its potential growth. However, an aspect of cryptocurrency trade that can be particularly dangerous is isolated Margin trade. In this article, we deepen the risks related to the isolated Margin trade and explain why investors are essential for investors to understand these risks before being involved in the cryptocurrency trade.
What is isolated cover trade?
Separate hedging trade refers to a type of Margin trade where the trader maintains his or her separate funds from the capabilities used for commerce. This means that the losses arising during the meeting of the meeting are supported only by the trader, while not affecting other assets. On a separate hedge account, the trader has two separate accounts:
- Primary Margin Account : This is the account used for trade and usually contains enough money to cover potential losses.
- Cuenta de Margen Aislado : Esta es la cuenta que mantiene sus propios fondos, separados de los de la cuenta de margen Principal.
Risks related to isolated margin trade
Separate hedge trading carries significant risks that include:
- Liquidity Risk : If the trader’s primary margin account is exhausted, there may not be enough basis to cover potential losses, making it difficult to maintain the remaining positions or even close existing positions.
- Collateral Risk : If the trader closes a loss position on his isolated cover account and uses guarantees, there is a risk of eliminating other devices that are not intended for this purpose.
- Risk of hedge calls
: If an isolated cover invoice is used for trade, the trader may receive a margin call if the main margin account falls below a certain threshold. This can cause greater losses for the trader and potentially causes them to close positions that cannot afford the loss.
- The risk of his associates : If a trader uses a third party aisle or exchange that is not transparent in their risk management practice, it can lead to unexpected interest rates, fees or other sanctions.
The consequences of ignoring risks
Ignoring risks related to isolated Margin trade can have serious consequences for investors, including:
- Financial Loss : Traders who do not deal with their risk can suffer significant losses that can cause financial ruins.
- Regulatory measure : Regulatory agencies such as the Trade Committee (CFTC) or the BAG and Securities Committee (SEC) may take measures against merchants involved in the Margin trade without proper supervision.
Risks mitigate
In order to alleviate these risks, it is essential for investors to understand their own risk tolerance and effectively manage their operation. Here are a few steps that can help:
- Diverzifikálja : Terjesztse el a befektetéseket többféle eszközbe és piacra az expozíció minimalizálása érdekében.
- Define real goals : Understand possible investment returns and realistic goals based on market conditions.
- Use risk management tools : Use risk management tools such as loss or dimensioning orders to limit losses and risk.
Conclusion
Isolated margin trade can be a high risk for investors who do not understand their own risk tolerance and lack effective risk management strategies. By recognizing and taking measures to alleviate isolated Margin trade risks, operators can minimize potential losses and guarantee long -term financial success in the cryptocurrencies.