You may already be familiar with Exchange Trading, which is available on most cryptocurrency exchanges - including Coinmetro!
Here are the main differences between Margin and Exchange trading:
Features | Exchange Trading | Margin Trading |
Do my account balances update immediately after an order is filled? | Yes | No - instead an open position is created which has a floating profit or loss (P/L) that automatically updates as market prices change |
Can leverage be used? | No | Yes - leverage can be used (up to 5:1 at Coinmetro) to amplify potential gains and losses |
Can the trade value exceed available funds? | No | Yes |
Can you sell (short) an asset that you don't own? | No | Yes |
What is the maximum trade size? | The available balance of the asset being sold | Free margin x leverage equivalent value |
When do account balances update? | Once the order has been filled | Once the position is closed |
For which assets do the account balance(s) update? | The assets being exchanged | The settlement currency. At Coinmetro, this will be your primary collateral currency |
Can I withdraw my bought assets to an external wallet? | Yes | Settled profits can be released from collateral and withdrawn; however, other assets in open positions cannot |
Summary
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 cryptocurrencies for long-term holding and/or for trading without greater risk, then Exchange Trading would be more suitable for you.
Coinmetro’s Demo Platform is always available if you would like to practice without risk. Please note that this article is not to be seen as trading or financial advice. It is for educational purposes only.