What Is the Primary Risk Associated with Using Margin in Cryptocurrency Trading?

The primary risk is the amplified potential for losses due to leverage. Margin trading involves borrowing funds to increase a position size, meaning both profits and losses are magnified.

If the market moves against the position, the trader can face a margin call, and if the collateral falls below the maintenance margin, the position will be forcibly liquidated. This forced liquidation can result in losing the entire collateral (initial margin).

High volatility in crypto exacerbates this risk.