Margin trading allows you to open positions larger than your available funds by using collateral. While this can amplify profits, it also comes with higher risks, especially in the volatile crypto market.
Here’s a guide to help you understand these risks and manage them effectively.
💹 How Margin Trading Works
On Coinmetro, you can trade with leverage up to 5:1.
Example:
If you allocate €1,000 as collateral, you can open a position worth €5,000.
While this increases your potential gains, it also amplifies losses. Crypto prices can move quickly, so positions can change drastically in a short period.
Important note: If your available margin drops to 0% (corresponding to a free margin of -70%), all your open positions will be automatically closed. This is called a stop-out or liquidation, which is why careful planning and monitoring are essential.
🛡️ Tips to Mitigate Risk
Trading on margin can be exciting, but it requires careful planning and discipline. By taking proactive steps, you can protect your capital, reduce stress, and trade more confidently.
1️⃣ Set a Stop Loss or Take Profit
Using Stop Loss (SL) or Take Profit (TP) orders is the easiest way to manage risk.
A Stop Loss closes a position automatically if the price moves against you.
A Take Profit closes a position when your target profit is reached.
⚠️ Note: Some slippage may occur in fast-moving or low-liquidity markets, but using stops is highly recommended, especially when trading with leverage.
2️⃣ Have a Trading Plan
Planning ahead helps protect your capital:
Never trade more than you are willing to lose
Set target prices for profits and losses
Monitor positions regularly and plan actions if losses occur
A structured approach reduces stress and improves decision-making.
3️⃣ Pay Attention to Price Warnings
Coinmetro’s Price Warning feature alerts you if an order could lose more than 3% due to slippage.
How it works:
Slippage < 3% → No warning
3.00% – 4.99% → Green warning
5.00% – 9.99% → Orange warning
10%+ → Red warning
The warning appears:
When placing a new market or limit order
When editing an open order
On both Exchange and Margin platforms
Use this feature to stay aware, act quickly, and manage risk effectively.
⚠️ Currently, Price Warnings do not account for spreads and do not appear when doubling or closing a % of active positions.
🏫 Practice Safely
Coinmetro’s Demo Platform allows you to practice margin trading without risking real funds.
⚠️ This article is educational only and is not financial advice. Always trade responsibly.
FAQs
💡 What is the biggest risk of margin trading?
The main risk is amplified losses due to leverage. Positions can be liquidated if your margin drops too low.
🛡️ How can I reduce risk in margin trading?
Use Stop Loss/Take Profit orders, create a trading plan, and monitor your positions regularly.
⚠️ What is a stop-out or liquidation?
A stop-out occurs when your available margin reaches 0%, automatically closing all positions to prevent further losses.
📊 What is slippage and why do Price Warnings matter?
Slippage is the difference between your expected execution price and the actual one. Price Warnings alert you if an order could lose more than 3% due to slippage.
🧪 Can I practice margin trading safely?
Yes! Coinmetro’s Demo Platform lets you practice margin trading without any risk, helping you learn strategies and manage risk effectively.