Stay away from Margin Trading if you don’t even know about the fees associated

dfmines Cryptocurrency News May 13, 2023 | 0

Let's take BUSD for example.

0.047681% Borrow DAILY Interest Rate.

That means if you borrow 10000$ and hold your position for a day, you will pay 0.047681%.

10000*0.047681% = 4.7681$

No big deal? 5$ is nothing if you get to borrow 10000$ right?

So you decided to take a long long position for a year or two or more to get through the bear market.

How does 4.7681$ every day for 365 days sound?

1740.35 $

So the annual interest rate if you forget about compounding is 17.40%.

Since compounding is a thing and it doesn't stop existing if you forget it.

Compounding Daily interest rate for 365 days = Actual annual interest rate

Actual annual interest rate = (1+(0.047681/100))³⁶⁵ – 1

= 1.19004863 – 1

= 0.19004863

The actual annual interest rate comes out to 19%.

If you think your trading strategies yield you more than 19% + inflation rate, you do not need to look at these fees.

If you are struggling to break even year on year, you need to rethink your margin positions.