Blockchain and Cryptocurrency Beginner - About Cryptocurrency Margin Trading

Crypto margin trading is basically when a crypto trader borrows a cryptocurrency asset in addition to the trader’s initial capital so as to have more capital to perform a trade in order to make more profit when the price of the cryptocurrency used for trading goes up. In other words, crypto margin trading allows a crypto trader to borrow a particular asset so as to leverage assets that the trader already owns in order to have more purchasing power to trade with and make more profit from the trade.

This is where margin trading comes into play, so as to help traders who want more capital and more profit if the price goes in their favour. When the margin or leverage trade is successful, the trader would pay back the borrowed asset with interest.

For instance a crypto trader has $500 in a particular crypto asset and wants to make a trade with $5000 so as to make bigger profit, the trader decides to borrow additional $4500 from the margin trading platform in order to have the purchasing power of $5000 to buy a particular cryptocurrency and make more profit when the price goes up. This is called a 10x margin or leveraging 10x the initial capital.

This would turn out to be very profitable when the price of the purchased asset goes up as the trader would make 10x the profit, however, when the price of the asset falls down, the trader would have a 10x loss as well. Margin trading can be very profitable if done right but can be very risky as well because a trader can lose his initial trading capital when the price of the cryptocurrency invested falls down.

How To Plan For Trading In Crypto Margin Trading

Trading in general requires a lot of careful planning so as to make the right decisions when investing in any cryptocurrency asset because of the high risk of price volatility in the market. However, margin trading is even more advanced and requires even more careful planning in order to be in a good position to make more profit. To plan for margin trading, the trader has to;

• Have a clear entry and exit plan

• Always pay attention to trends

• Always margin trade with risk capital

• Never allow greed get into the way.

• Make sure to do proper technical analysis before jumping into any margin trade so as to be able to predict the price direction of the cryptocurrency

• look out pay attention to sentiments which can drastically affect the price of any cryptocurrency

• Have a clear strategy before jumping into any margin trading

• Stick to trading rules

• Not allow personal emotions get into the way of trading.

Crypto Exchanges Name That Provide Margin Trading Service and What Margin They Provide?

• Binance – Binance offers margin trading on Large marketcap coins up to 5x
• Poloniex - Poloniex offers margin trading up to 2.5x
• BitMEX - BitMEX is another platform that focuses a lot on BTC margin trading and up to 100x leverage.
• Kraken - similar to Binance, Kraken offer margin trading on larget marketcap up to 5x
• StormGain – StormGain offers margin trading up to 200x on large marketcap coins
• Bityard – Bityard provides margin trading up to 125x