MARGIN TRADING WITH RIGEL PROTOCOL
Cryptocurrency is a commerce of many distinct ways. You may have heard of Bitcoin shortcuts, crypto-margin trading or heavyweight crypto-trading. All these names refer to the same technique known as leverage trade, but the concept they are used might make it rather difficult to comprehend how it works.
However, it is not necessary to complicate Crypto margin trading. The crypto market is volatile in simple words. The variations in prices shown by crypto markets enable crypto traders to make a profit from Bitcoin margin trade, both in bear and bull markets.
What is Margin Trading?
Margin Trading represents a method used by a third party for trading assets. Margin accounts allow traders to have access to higher capital amounts, which allow them to take on their position compared with conventional trading accounts. Margin Trading essentially increases the results of trade so that traders can make greater earnings from successful trading. This potential to enhance trading results makes margin trading extremely popular on low-volatility markets, especially the Forex world. However, in stock, commodities and cryptocurrency markets, margin trading is also being utilized.
The borrowed funds generally come from an investment broker in traditional markets. However, funds are typically provided in cryptocurrency trading by other traders who earn interest on the basis of the market demand for margin money. Even if less prevalent, some cryptocurrency exchanges reward their members with marginal funds.
Why Margin Trade?
Margin trading allows reliable traders to open positions, which can be much more profitable than otherwise. For instance, a properly closed position at 100X leverage yields 100 times more profits than a "regular" position.
Trading of margins Bitcoin and other cryptos also enable strategic traders to profit from short shifts in the bear market. For example, a trader expecting a huge price drop could put a portion of his portfolio in short order to obtain a profit that compensates for the probable loss caused by a major price drop.
Pros and cons of Margin Trading
The most obvious benefit of margin trading is that, because of the higher relative worth of trade positions, it can lead to larger gains. Margin trading can also be useful as traders can open up several positions with relatively small investments. This can be useful for diversification. Lastly, a margin account can facilitate the rapid opening of jobs for traders without having to transfer big sums of money to their accounts.
For all its upsides, the clear disadvantage of margin trading is that it can raise losses as well as enhancing gains. In contrast to normal spot trading, margin trading has a potential for losses that are greater than the original investment of a dealer and are therefore a technique of trade with high risks. Even a slight dip in market prices can bring large losses to traders depending on the number of levers engaged in a deal. Therefore, the employment of appropriate risk-management procedures for investors who decide to use margin trading and the use of risk reduction mechanisms such as stop-limit ordering are vital.
Rigel Protocol Margin Trading
Margin is the money borrowed from a lender and is a difference between the entire value of a loan and the amount of the loan. Margin trading refers to the activity of trading the lender's borrowed money as an asset that constitutes a collateral for the lending by the lender. The majority of lenders in Crypto are concentrated trade. This can lead to an interest dispute because these exchanges can simply manipulate price to increase profit in the case of erroneous user forecasts.
Margin trade is more risky than regular trade, but the risks are significantly bigger when it comes to cryptocurrency. The cryptocurrency margin traders should be particularly careful due to its high levels of volatility, typical of such marketplaces. Margin trading is certainly not appropriate for novices, however hedging and risk control measures may work.
Modes by which Rigel Protocol tackles the Cons of Margin Trading.
To help customers overcome issues linked to leverage trading, Rigel Protocol will implement Margin Trading for the decentralized finance area. The margin trade product is more user-orientated so that margin traders have new foundations:
Decentralization
With no requirement for Know Your Customer (KYC) protocols, the Rigels Protocol margin trading platform users would have the freedom to decentralize, and at the same time assure anonymity and maximum security.
Reduced Manipulations
There are many manipulations in the price and supply of specific assets on centralized platforms.
RigelProtocol Margin Trading would benefit from prices from different top DeFi platforms.
Non-custodial Wallets
This enables users not to store or deposit their monies in exchanges. At all times, user assets are completely controlled by the wallet owner so that safety may be maintained at the most.
Interest Profit Share
Through the Rigel Protocol interface, users can give the lending pool with funds (liquidity) and earn interest from users taking the lending pool.
Lenders Profit
Rigel Protocol Lending Pool lenders will also benefit from the earnings of margin trading users from lost or liquidated funds.
Categories of Rigel Protocol Margin Traders
For the margin trading feature, it would require two sets of users:
- The Lending Pool Provider (The Rigel Lender)
- The Leverage Trader ( The Rigel Trader)
The lending pool provider, that is, the provider of the loan pool will add money to the loan pool. The leverage trader will thereafter be able to leverage funds. He selects a leversize and sets a collateral according to the level of risk he is prepared to take. Leverage Trader The trader can choose the position for purchase or sale. When the trade is in favor of the Leverage Trader profit, the Trader’s wallet address is assigned. Otherwise, the losses or liquidation amount will be added to the lending pool dispersed between loan providers, the governance community RigelProtocol, or the native RigelProtocol holders, as well as the treasury RigelProtocol.
About Rigel Protocol
Rigel is a decentralized protocol for a variety of DeFi products on Blockchain. A protocol designed to enhance and update existing Decentralized Finance (DeFi) capabilities while providing various unique DeFi products to promote Blockchain scalability, security, operating and adoption experience.
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