Crypto Margin Trading: Till a few months back, we were only aware of Stock Margin Trading. But recently we are noticing many cryptocurrency exchanges are offering crypto margin trading to their investors.
Cryptocurrency trading is considered very sensitive for profit and loss as well. Your $1000 dollar could become $5000 overnight. While on the other side, your $1000 could become $100.
So, it is advised to trade cryptocurrency very carefully and smartly. It is a great technology to earn if understand correctly. Crypto Margin Trading can provide an opportunity to earn more than 50X leverage on your initial investment amount. Because of the margin provided by the broker or individual or exchange itself.
In most of the traditional markets, leverage is provided for intraday. But in crypto, it has no limit if you are making a profit from your trade.
What Is Crypto Margin Trading?
Crypto margin trading is a kind of trading where you can purchase crypto with leverage or place a buying order higher than the initial currency you have in your wallet. Suppose you have 100 USDT in your wallet, and 5X leverage is provided to you by the broker or exchange. Then you can place buying order with 500 USDT coins.
If your exchange is providing 2:1 leverage, then you can place a buying order with 200USDT.
Crypto Margin Trading is an opportunity to purchase orders with leverage value.
Margin Trading Credit: Fidelity Investment
Crypto Margin Trading Pros
Suppose you have $100 BTC in your portfolio. Suppose BTC surged by 10%, then your profit will be $10. On the flip side, if you will get 10X leverage for trading then you will be able to buy $1000 BTC. And on a 10% price surge, you will get a $100 profit.
- Margin trading can make more money for you in a very short time period.
- If price increase, leverage time period can be increased.
- Can make huge profit with small lending charge or interest rate.
Crypto Margin Trading Cons
Suppose you have $100 and get 10X leverage or margin on buying BTC. You can place buying order of $1000. Now suppose BTC price dropped by 10%. In this case, your trading amount will reduce by 10%.
Now you have $900 in your portfolio. When you will return the leverage, your account will be left with nothing.
- Margin Trading can make your portfolio zero.
- If price dropped, the order executed automatically in loss.
- You have to pay lending charge or interest along with trading fees.
Crypto Margin Trading Platforms
- Bybit Exchange (Get 90% Joining Bonus)
- CoinDCX Exchange (Get 100 INR Worth BTC Joining Bonus)
- Binance Exchange
- Huobi Exchange
- BitMEX Exchange
- Deribit Exchange
Why Exchange offer Leverage to Traders?
As we have already told you that cryptocurrency trading can be very risky. And it can also be beneficial because here you get many times more profit. But in margin trading, you do not face any problem when you make a profit, but when loss starts, then your portfolio can be zero.
Lending is a great option for those who do not want to take too much risk in cryptocurrency trading. Most of the investors don’t want to take the high trading risk. Instead of trading, they lend their crypto to someone else and earn passive interest on their asset.
Many top brokers or exchanges are offering up to 20% lending interest. So, most of the beginners lend their BTC, USDT, and other coins instead of trading them for profit.
FAQ
Yes
Leverage is the amount provided by the broker to place a buying order. It could be 5X, 10X, 25X, and 100X.
If you will trade with your portfolio balance, then your buying assets will remain in your account. Doesn’t matter price is going down or up. In the loss, you can wait for the price to surge.
While in margin trading, you have to sell your cryptocurrency when you got the loss. In some cases, your portfolio may become zero.
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