What factors are considered in the calculation of margin call for cryptocurrency trades?

1 answers

• SkyWormJan 07, 2022 · 4 years ago
  Margin calls in cryptocurrency trades are calculated by taking into account several factors. The leverage ratio used in the trade is an important factor to consider. Higher leverage ratios increase the risk of margin calls as they amplify both profits and losses. The initial margin requirement set by the exchange is also considered. Traders must maintain a certain amount of collateral in their margin accounts, and if the account equity falls below this requirement, a margin call is triggered. The volatility of the cryptocurrency being traded is another factor that affects the calculation of margin calls. Highly volatile cryptocurrencies are more likely to experience sudden price movements, increasing the risk of margin calls. Additionally, the position size and available balance in the margin account are taken into account. If the position size is too large relative to the available balance, the likelihood of a margin call increases. Traders should be aware of these factors and manage their positions accordingly to avoid margin calls and potential liquidation of their trades.
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