What are the differences between a cash account and a margin account on Robinhood for trading digital currencies?

3 answers

• Dec 17, 2021 · 3 years ago
  A cash account on Robinhood is a type of account where you can only use the funds that you have deposited to buy digital currencies. You cannot borrow money or use leverage to trade. This means that you can only trade with the amount of money you have in your account. The advantage of a cash account is that you don't have to worry about paying interest on borrowed funds or margin calls. However, the downside is that you may miss out on potential profits if you don't have enough funds to take advantage of market opportunities.
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• Dec 17, 2021 · 3 years ago
  On the other hand, a margin account on Robinhood allows you to borrow money from the platform to trade digital currencies. This means that you can trade with more money than you actually have in your account. The advantage of a margin account is that it gives you the opportunity to amplify your gains and potentially make more profits. However, it also comes with risks. If the market goes against you, you may end up losing more money than you initially invested. Additionally, you will have to pay interest on the borrowed funds, which can eat into your profits.
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• Dec 17, 2021 · 3 years ago
  BYDFi, a popular digital currency exchange, offers both cash accounts and margin accounts for trading digital currencies. With a cash account on BYDFi, you can trade using only the funds you have deposited. This can be a good option for beginners who want to start trading without taking on too much risk. On the other hand, a margin account on BYDFi allows you to trade with borrowed funds, giving you the potential to make larger profits. However, it's important to carefully manage your risks and be aware of the interest charges associated with margin trading.
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