Margin trading involves using borrowed funds from a broker or exchange in order to invest in crypto, allowing traders to invest in cryptocurrency without having to pay for the full amount out of their own pocket. It is one of the famous trading types because it lets traders use large sums of capital and leverage their position. At the same time, the potential of losing funds is equally high as well.
Since the majority of the funds used in margin trading are loaned from a broker, traders increase their profit potential even on small price movements. Moreover, when good risk management practices are used, losses on leveraged trades can be kept under control.