Margin Trading

With margin trading, traders can potentially earn larger profits from smaller price movements in the market, but also face higher risks.

1. To start margin trading: a trader must first open an account with a broker or exchange.
   

2. The trader then deposits a certain amount of capital, known as the margin, as collateral.
   

3. The broker or exchange will then lend the trader additional funds, allowing them to increase the size of their positions.

The amount of leverage, or the ratio of borrowed funds to the trader's own funds, varies depending on the broker or exchange and the asset being traded. For example, a broker may offer leverage of 2:1, which means the trader can borrow twice the amount of their own capital, or leverage of 10:1, which means the trader can borrow ten times their own capital.