Conversation between someone new to cryptocurrency investing and someone with previous experience of margin trading with bitcoin.
I share this in the hopes it will save some people from unnecessary risk and loss.
A true story…
A few weeks later… (27 December)
The moral of this true story, do not do ‘margin trading’ with cryptocurrency unless you have a professional financial advisor or want to risk your lunch money for the next 50 years.
If you’re not sure what margin trading is, it’s basically a way to borrow money from the exchange and either profit or lose based on all that you’ve borrowed.
For example, if you have $1,000 in your account, you can borrow say $9,000 to buy bitcoin. Then if the bitcoin goes up, you make the profit out of $10,000 instead of only on your original $1,000. Then you sell the margin position, return the $9,000 and pocket the extra profits.
In reality, it’s an easy way to lose a LOT of money.
Re-read the story and don’t gamble given your opportunity for crypto investing (without margin trading) is so abundant.