Why is it important for the order premium to be lower than the collateral when trading cryptocurrencies?

3 answers

• shen charlesOct 05, 2021 · 4 years ago
  When trading cryptocurrencies, it is essential for the order premium to be lower than the collateral to ensure a safer and more profitable trading experience. By keeping the order premium lower than the collateral, traders can minimize the risk of losing their investment in case of market fluctuations. This strategy helps to protect their capital and maintain a healthy trading account balance.
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• Sujal RoyJun 01, 2025 · 6 months ago
  The order premium being lower than the collateral is important because it allows traders to have a buffer in case the market moves against their position. If the order premium is higher than the collateral, even a small price movement can result in a margin call or liquidation. By keeping the order premium lower, traders have more flexibility and can withstand short-term market volatility without facing significant losses.
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• tm_w_pMar 23, 2021 · 5 years ago
  When it comes to trading cryptocurrencies, BYDFi recommends keeping the order premium lower than the collateral. This approach aligns with our risk management principles and helps traders mitigate potential losses. By maintaining a lower order premium, traders can better protect their investment and have a higher chance of achieving profitable trades. It is crucial to carefully consider the order premium and collateral ratio to ensure a successful trading experience.
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