In Tiger Trade, a mobile trading application developed by Tiger Brokers offers users the flexibility to choose between margin trading and cash trading, depending on their preferences and account type. Whether you’re looking to trade with leverage or stick to a more straightforward approach, Tiger Trade has options that cater to different trading styles and needs. Here’s a breakdown of how both margin and cash trading work on the platform.
Margin Trading on Tiger Trade
Margin trading, also known as financing, allows you to borrow funds to trade larger positions than you could with just your deposited cash. This offers the potential for greater returns but also increases the risk of greater losses if the market moves unfavorably.
How Margin Trading Works:
To engage in margin trading on Tiger Trade, you need to have a Margin Account.
You can deposit funds in any currency into your account, and once the deposit is made, you can use that balance to borrow additional funds (up to a specified limit) and trade in various markets.
This allows you to trade larger positions than your cash balance would otherwise allow, using leverage to amplify your trades.
Margin trading offers the ability to diversify your portfolio more quickly, but it’s important to fully understand the risks, as borrowed funds must be repaid, regardless of market conditions.
Cash Trading on Tiger Trade
If you prefer to avoid the risks associated with borrowing funds, Tiger Trade also provides options for cash trading. You can trade without the use of leverage, which means you only use the funds you’ve deposited into your account.
How Cash Trading Works:
Available for both Margin and Cash Accounts: Whether you have a Margin Account or a Cash Account, you can choose to trade using cash rather than financing.
Deposit in SGD, USD, or HKD: You can deposit funds in SGD, USD, or HKD into your account, and then trade in the corresponding market(s) based on your deposit currency. For example, if you deposit SGD, you can trade in markets where SGD is used, and similarly for USD and HKD.
Currency Conversion: Alternatively, you can deposit any of these currencies (SGD, USD, or HKD) into your account and use Tiger Trade’s currency conversion feature to convert your deposit into another currency. Once converted, you can trade using the available cash without leveraging borrowed funds.
Cash trading provides a straightforward and lower-risk approach, as you’re trading solely with the funds you have available. This option is especially appealing to those who prefer to avoid the complexities of margin trading or who are looking to manage their risk more conservatively.
Key Differences Between Margin and Cash Trading
Margin Trading: Allows you to borrow funds to trade larger positions, offering the potential for higher returns but also higher risks. Only available for Margin Accounts.
Cash Trading: Involves using only your deposited funds to make trades, ensuring you don’t take on any additional debt. This option is available for both Margin and Cash Accounts.
Which One Should You Choose?
The choice between margin and cash trading ultimately depends on your trading goals, experience level, and risk tolerance. Margin trading offers the potential for higher returns but introduces the risk of losing more than your initial deposit if the market moves against you. Cash trading, on the other hand, provides a simpler and safer way to trade, as you are only using your available funds and won’t need to worry about the risks associated with borrowing money.
If you’re new to trading or prefer a more conservative approach, starting with cash trading might be the best option. For experienced traders who are comfortable with the risks of borrowing funds and are seeking to amplify their trading positions, margin trading may provide the flexibility they need.
Conclusion
Tiger Trade offers the flexibility to choose between margin and cash trading, giving users the freedom to select the approach that best suits their needs and risk profile. Whether you’re looking to trade with leverage or prefer a straightforward, cash-based strategy, Tiger Trade has the tools to help you execute your trades effectively. As always, it’s essential to understand the risks and benefits of each option before making any trading decisions.
