What is Margin Trading? Shorting the Market Explained | Kundai Dzawo - Investing & Trading | Skillshare

What is Margin Trading? Shorting the Market Explained

Kundai Dzawo - Investing & Trading, Technical Analysis & Trading Coach

What is Margin Trading? Shorting the Market Explained

Kundai Dzawo - Investing & Trading, Technical Analysis & Trading Coach

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5 Lessons (11m)
    • 1. Margin Trading Class Introduction

      1:21
    • 2. What is Margin Trading?

      1:44
    • 3. How Does Margin Trading Work?

      3:48
    • 4. What are the Advantaged & Disadvantages of Margin Trading

      2:21
    • 5. Margin Trading Cryptocurrencies

      1:57
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About This Class

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In this "Margin Trading" class you will learn what margin trading is and how it works in different markets.

Have you always wondered what margin trading is? Or what shorting the market means? 

Then this "Margin Trading" class is for You!

We are looking for students eager to learn and develop their trading knowledge & skills.

And the best part, you do not need any prior experience to get started!

This course is designed for BEGINNER traders & investors.

If you have advanced knowledge in Trading, this course is NOT recommended.

WHAT YOU'LL LEARN:

By the end of this course, you will have a solid grasp of what Margin Trading is & how it works. You will be well informed on the pros & cons of Margin Trading in various financial markets such as the Stock Market & Cryptocurrency Market.

This course is aimed at people that are interested in Stock Trading, Bitcoin/Cryptocurrency Trading & Investing. We’ll start from the very beginning and work all the way through, step by step. If you already have some trading experience but want to learn more and improve your trading knowledge, then this course is perfect for you too!

If you are an advanced trader or an individual that has advanced knowledge in Margin Trading, then this course is NOT recommended.

It's time to take action!

Start learning about Margin Trading today!

Meet Your Teacher

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Kundai Dzawo - Investing & Trading

Technical Analysis & Trading Coach

Teacher

I'm a Trading & Investing Coach at PiggiBacks. Sharing knowledge is part of who I am, and coaching is where I am at my best because I've been on both sides of that equation. I teach with passion & purpose. Delivering useful training is of great value to me. Every course is delivered with my students in mind.

I've spent a long time studying how others learn and teach, to refine how I can work with people in an efficient, useful, and, most importantly, memorable manner. My mission is for all my students to carry what I've shown them into a bright future.

Building Rich & Valuable Content for Everyone. 

Kundai Dzawo

 

See full profile

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In October 2018, we updated our review system to improve the way we collect feedback. Below are the reviews written before that update.

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Transcripts

1. Margin Trading Class Introduction: You've most likely heard of traders talk about shorting the market. This can be very confusing if you have not heard of the term shorting before or if you don't know anything about margin trading, traders are able to short the market because of margin trading. So what is margin trading? Well, in this class, I will explain what margin trading is and give examples of how it works. Further, we will talk about the advantages and disadvantages of margin trading and how you can actually use margin trading in cryptocurrency markets. For those of you that may not know who I am. My name is cunei. I am a trading, investing and technical analysis coach at piggybacks, which you can find at piggybacks.com. And I will be your instructor in today's class. Make sure that you hit the Follow button if you're interested in trading, investing, technical analysis, or personal finance classes, so that your updated as soon as I upload a class on skillshare without further ado, let's get right into it and start learning about margin trading. 2. What is Margin Trading?: Right, so let's explain what margin trading is. Well, in a simple explanation, margin trading is just a method that anyone can use to buy or sell financial trading assets, such as stocks or cryptocurrencies. However, for you to be able to place a buy or sell order with the method of margin trading, you will have to use borrowed funds provided by third party. So in comparison to regular trading or Spot Trading, margin trading will allow you to access a greater amount of capital. These are borrowed funds permitting you to leverage your position. So basically margin trading amplifies your trading position, which results in larger profits on successful trades. And this ability to magnify trading results is one of the most common reasons why margin trading is so popular in traditional markets, the third party that provides borrowed funds when margin trading is usually a bank or an investment broker. This is different when it comes to managing trading for cryptocurrencies. Borrowed funds are often provided by retail investors or other trade is when it comes to cryptocurrencies. And these individuals will earn an interest on the borrowed funds based on market demand. It is less common. But you may also find cryptocurrency exchanges that actually provide margin funds to their users. 3. How Does Margin Trading Work?: How does margin trading actually work? Well, when you initiate a margin trade, you are required to commit a percentage of the total order value. This initial investment is known as the margin, and the concept of leverage is closely related to the margin. Basically, margin trading accounts are used to create leveraged trading. The leverage depicts the ratio of borrowed funds to the margin. For example, to open a 1, 0, 0, 0, 0, trade at a leverage ratio of five is to one. A trader would need to commit to a $100 of their capital and $800 would be the borrowed funds. You will find that different trading platforms and markets offer a distinct set of rules and leverage rates in traditional markets. 4. What are the Advantaged & Disadvantages of Margin Trading: So let's talk about some advantages and disadvantages of margin trading. While the fact that margin trading can result in larger profits due to the greater relative value of your trading position is the most obvious advantage of margin trading. Another advantage is that margin trading allows you to short the market. This means that you can actually bet against the market. For example, you can place a position against the market price going up. This is one very big advantage that seems to make margin trading very, very popular. Investors can also use margin trading for diversification as they can open several positions with relatively small amounts of investment capital. And finally, opening a margin account may make it easier for you as a trader to open positions quickly without having to shifts large sums of money to your trading account. Now, on the downside, the most obvious disadvantage of margin trading is the increase in your probable losses the same way that it can increase your probable gains. With margin trading, it is possible to have losses that exceed your initial trade investment. Hence why it is considered as a high risk trading method. A slight drop in the market price may cause substantial losses for traders depending on the amount of leverage involved in the trade. For this reason, it is very important that investors or traders who decides to utilize margin trading employ risk management strategies and make use of risk mitigation tools such as stopped limit orders. That being said, I wouldn't advise any beginner traders to use margin trading until they have had enough experience and exposure to the markets. This is simply because it is too risky. I would recommend that you start off with traditional trading methods such as Spot Trading and only get involved with margin trading once you have a good amount of experience and you're confident in your trading and technical analysis skills. Margin trading is very, very risky. 5. Margin Trading Cryptocurrencies: Margin trading in cryptocurrency markets. When it comes to margin trading, it is inherited only riskier than regular Spot Trading. And when it comes to trading cryptocurrencies, the risks are even greater. This is due to the high levels of volatility that is typical of these markets. Investors that choose to margin trade cryptocurrencies should be very careful and cautious, though hedging and risk management strategies may come in handy. I personally categorize margin trading as certainly not suitable for newbies or beginners. The ability to perform technical analysis on a chart, identify trends, and determine entry and exit points does not eliminate the risks involved with margin trading. However, these skills may help you to better anticipate risks and trade more effectively. Therefore, I always recommend that traders or investors develop a keen understanding of technical analysis and acquire an extensive Spot Trading experience first, before leveraging the cryptocurrency trades. If you're interested in learning more about technical analysis and trading cryptocurrencies, checkout, my stock trading and cryptocurrency trading, gold from beginner to a pro course. And make sure you hit the Follow button on Skillshare so that you're able to be updated every time that I post a class that you may be able to benefit from, I will be providing classes on trading, investing, technical analysis, and personal finance. So until next time, thanks for watching and I'll see you in the next class.