Margin Trading

Margin trading is borrowing from a venue, or from other users through it, to hold a position larger than your own balance supports, with your deposit held as collateral against the loan. It is the umbrella the specific mechanics sit under: initial margin is what you post to open, maintenance margin is the floor you have to stay above, and falling through that floor brings a margin call or an automatic close-out. Crypto venues offer it in two shapes. Spot margin lends you funds or coins to buy or short an asset you then actually hold, and charges an hourly or daily interest rate on the borrowed amount. Derivatives margin posts collateral against a contract rather than a coin, and charges funding instead of interest. Either way the cost accrues whether the position moves your way or not, so a trade held through a flat market can lose money on carry alone. Losses scale in the same proportion as gains, and the venue decides when the position closes, on its own index price and its own schedule rather than yours.