What is the appropriate ratio of margin replenishment in the currency circle?

The appropriate range of the currency circle cover-up ratio varies depending on the investor's risk tolerance, investment goals and market conditions. For investors with medium risk tolerance and long-term investment goals, the recommended replenishment ratio is between 10% and 30%, while for investors with lower risk tolerance or investors with short-term trading goals, it is recommended The margin coverage ratio is between 5% and 15%.

The appropriate range of margin call ratio in the currency circle

In the cryptocurrency circle, margin call means buying more similar assets at average cost. The appropriate range of margin call ratio depends on the investor's risk tolerance, investment objectives and market conditions.

Risk tolerance

Investors with higher risk tolerance can adopt a higher replenishment ratio in order to obtain higher returns. Investors with lower risk tolerance should choose a lower cover ratio to limit potential losses.

Investment Goals

If investors’ goal is to hold assets for a long time, they can consider a higher replenishment ratio. This is because in the long term, market trends are more likely to be upward. On the contrary, if investors are aiming for short-term trading, they may be more suitable to adopt a lower cover ratio to reduce the risk caused by market fluctuations.

Market conditions

Market conditions also affect the appropriate replenishment ratio. In a bull market, investors may consider a higher margin coverage ratio as asset prices are more likely to rise. In a bear market, investors should adopt a lower cover ratio to reduce potential losses.

Usually recommended range

Generally speaking, for investors with medium risk tolerance and long-term investment goals, the recommended replenishment ratio is between 10% and 30%. For investors with low risk tolerance or whose investment goals are short-term trading, the recommended margin coverage ratio is between 5% and 15%.

Specific Case

For example, let’s say an investor buys $10,000 of Bitcoin and Bitcoin subsequently drops 20%, bringing the price down to $8,000. If an investor applies a 20% cover ratio, they would purchase $2,000 of Bitcoin for $8,000, lowering their portfolio’s average cost to $9,000.

Conclusion

The appropriate range of margin coverage ratio depends on the investor’s risk tolerance, investment objectives and market conditions. Generally speaking, for investors with moderate risk tolerance and long-term holding objectives, the recommended margin coverage ratio is between 10% and 30%. However, investors should adjust the margin coverage ratio based on their specific circumstances.

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