Is Bitcoin Margin Trading Safe The Risks Of Bitcoin Margin Trading
Before placing a margin trade on any trading platform, make sure youâre aware that leveraged trading amplifies both profits and losses. When the crypto markets move in your favor, you’ll enjoy greater gains. On the other hand, however, youâll also be prone to suffer large losses if the price moves in the opposite direction than your prediction. Thus, margin trading is not suitable for anyone new to crypto trading.
It must also be noted that as a margin trader, youâll be required to hold a certain percentage of the value of your position on the exchange at all times for that position to remain open. In case you experience a loss on your position that exceeds a certain limit, known as the liquidation price, your order will be automatically closed.
One: Get A Bitcoin Wallet
As a beginner, the first thing you need to get is a Bitcoin wallet. With this wallet, you can store your Bitcoin and keep it safe for quick and easy access whenever you need it.
You can read our beginners guide on How To Buy Bitcoin for a detailed explanation on how to go about buying Bitcoin.
There are two popular types of wallets you can choose from
These are both mobile and desktop applications that offer you an online virtual crypto bank for storing your Bitcoin and accessing it online whenever you need it with no limits.
These software wallets can also be connected to your traditional bank account making it easy for you to buy additional crypto funds online at any time by using a bank transfer.
The only drawback is that you are handing your Bitcoin over to a third-party company like SwissBorg for safekeeping. And while the leading software wallets are trustworthy, it is important to remember that regulation in the Bitcoin industry is still at its infant stage and we have seen several popular third-party crypto companies collapse, get hacked, or vanish with investors money.
So, when choosing a software wallet for your crypto needs, you must carry out adequate online research on the company. You can read our guide on regular exchanges like this here.
These types of wallets are old school but a lot more secure than the software wallet. With these Hardware wallets, you can store your private key on physical hardware offline.
What Is Margin Trading
In simple terms, .
For example, a crypto exchange can lend you up to 200X of your original capital using your original capital as collateral. Now you can trade the borrowed funds, you will gain profits based on your the borrowed capital. However, if your balance becomes negative to an equal amount of your original capital, the exchange will liquidate your position and you will lose your original capital.
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How Do You Get Started In Bitcoin Trading As A Beginner
Coming into the Bitcoin market as a total beginner can be overwhelming and complicated at first, especially with all the fake news and scams going around in the industry.
But it becomes easier as time goes by and you begin to understand all the steps and processes involved in successfully navigating this industry. Bitcoin 101: What is Bitcoin? is the best Bitcoin Introduction for all beginners.
What Is A Margin Call
If the price of the asset held on margin drops in value significantly, a broker will issue a margin call. This means that traders will have to prove that they can return the amount borrowed, by depositing more funds. The account will usually be suspended from opening new trades until this has been completed, or the asset rises in value again. A margin call is designed to protect traders from losing more than they can afford.
For example, if youre trading $1,000 on margin with 5x leverage and the value of ETH drops 17.5%, the value of the asset you hold is now worth $4,125. Your operating loss is -$875. Since youve only deposited $1,000, youre in danger of losing more than your initial deposit amount if the value slips further. At this point, a margin call may be issued.
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Ascendex: Top Leveraged Trading Platform
This exchange is considered to be the top spot and margin exchange thanks to its huge offering of over 190 spot pairs and margin pairs. Its created by Wall Street veterans who have applied the rigor of the traditional market to create an experience for margin traders that is secure, reliable and robust.
Despite the high taker fee of 0.20%, AscendEX is still popular due to their great core functionality and a reliable crypto margin trading engine. It uses a range of order book views and charting tools that are integrated into the margin trading window allowing you to get all the tools you need to perform technical analysis right there on the site.
AscendEX is an excellent margin leverage trading platform that offers very low funding fees. It has also partnered with a licensed payment processing company to provide easy debit and credit card payments on the website. This allows users to easily deposit money and purchase crypto using legacy finance payment methods to immediately access margin leverage exchanging.
How To Short Bitcoin And Other Cryptocurrencies
Want to make gains while Bitcoin price is decreasing? Its possible. A short position on Bitcoin basically means that we believe in a coming-up drop in the price of Bitcoin. Technically, short positions work by selling the base asset first, in this case, Bitcoin, and then later buying it. You dont have to worry the exchanges do this process automatically for us.
The second role for shorting Bitcoin is the option to hedge a cryptocurrency portfolio. For example, if the crypto portfolio consists of 5 Bitcoin and we want to hedge against the risk of a possible Bitcoins decline, a 10X leveraged short position could be opened, and it would be equivalent to 40% of that Bitcoin portfolio.
To open the position, the amount required is only a tenth of it . That means that we need to hold only 0.2 Bitcoin on the margin exchange in order to hedge 40% of a portfolio valued 5 Bitcoins. Another advantage is the fact that only a small amount is stored on the exchange itself. As you might notice, from security reasons, its better to store the least amount possible on crypto exchanges.
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How Do You Find The Best Leverage Bitcoin Trading Platforms For You
When it comes to picking the right leverage Bitcoin trading platforms for your needs, you must remember that there is no one size fits all for exchanges. Each user has unique needs when trading Bitcoin and each exchange have unique strengths and weakness that can either favor your trading strategy or break it.
Understanding what your needs are is the first step to finding the best Bitcoin trading platforms that suit you.
Pros & Cons Of Margin Trading
There are quite a few advantages that come with margin trading that are universally agreed:
- Greater Return: This is of course an obvious one. Margin trading allows you leverage which means that your return is X times larger than without .
- Can Short the Asset: Margin trading also allows you to short the asset in question which means that you can benefit from falls in the price as well.
- Structured Trades: When combined with different degrees of leverage and buys / sells, margin trading allows the investor to place more structured trades. They can essentially develop strategies that look quite a bit like option trades.
As most may know, increasing returns in the cryptocurrency markets also means increasing risk. Trading on margin does not come without its drawbacks:
The key thing to appreciate about margin trading is that there are risks and that these risks can be significant if you do not have a strategy.
However, most successful margin traders will agree that as long as you are able to most effectively manage these risks, you can make a success of it. This is something that we will touch on a bit more below in some of Margin Trading Top Tips.
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Start Using A Margin Trading Exchange Today
Even within the chosen 9, there is a lot of variety, and which one youd like to choose depends entirely on what you are looking for as a margin trader.
There are others we like, such as the Kraken margin trading product. Do you want something specifically for beginners? Something with an excellent UI? An exchange with extremely high leverage?
Or just the all-rounded best exchange? Scroll up to the top of the page, have a glance at the list, and make your decision based on the factors that are most important to you.
Its all an individual choice, in the end. Good luck in the crypto trading world!
Reliable And Secure Crypto Exchange
The first thing you should keep an eye out for when it comes to picking the best Bitcoin exchange platform for you is online reliability and security. In simple terms, Can you trust this broker with your funds and your trading?
Choosing a broker with a trading platform that freezes or crashes every time there is a spike in the Bitcoin market is a recipe for disaster. This is the same for an online broker that does not take the fund security of its traders seriously.
Our top choice is , this company is one of the oldest, largest, and most reputable cryptocurrency exchange brokers in the industry. You can read our complete Bybit review titled
Claim up to $600 in Bonus
Phemex is also really good but a lot newer. The exchange platform implements a lot of cutting-edge technology when it comes to functionality, reliability, and security. You can read our complete Phemex review titled Phemex Review Is it Safe To Trade On Phemex?
Claim up to $112 in Bonus
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Cryptocurrencies Classified As Commodities
Cryptocurrencies are now a legally somewhat controversial new branch of financial trading products. Authorities are often even not yet sure how to categorize cryptos. In the US cryptocurrencies are legal, and since 2015 theyve been classified as a kind of commodity by the CFTC. So far it doesnt seem an option for the NFA to accept crypto trading brokers as members since cryptocurrencies and digital tokens do not belong to the group of financial products permitted and regulated by the agencies.
Procoinbasecom The Coinbase Margin Broker Platform
Coinbase is one of the big Spot Market exchanges in the USA where Bitcoin and some big altcoins can be bought and sold. The trading company operates 2 separate platforms for different trading activities.
On the main page Coinbase.com Bitcoin and altcoins can be bought and sold against USD . The Coinbase Pro platform is a separate website aimed at traders who want to trade cryptocurrencies for profit and who prefer an advanced trading environment.
One of the advanced trading features the Coinbase Pro platform has to offer is a slight leverage. The platform offers leverage of up to 1:3 for selected traders. This will probably have to be requested and activated.
Coinbase the main site of the company can be used in all US states, but there are restrictions for the usability of certain services depending on the US state, because Coinbase holds a separate license for each state. However, not all of them include the participation in Money Transmission, so the USD Wallet is not available in some states. Read more about this here.
Coinbase Pro supports about 30 cryptocurrencies. However, there are very different conditions. While some can be bought, others can only receive and send.
However, margin trading with 3x leverage can only be made available to selected traders from 23 US states. For licensing reasons Coinbase Pro can therefore only be used in the following states:
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Complex Trades Simple Interface
With Kraken, margin trading is accessible to everyone. Apply up to 5x leverage to an order with just one click, whether youre placing a .
What To Look Out For When Choosing Best Bitcoin Exchange Platforms
There are many Bitcoin trading exchanges out there, too many to test them all. So, this is why we chose the biggest and safest players in the crypto world and put them on our exchange list. But how should you choose in the list? Well, keep reading below, because we will mention a few key points to think about when youre looking to trade Bitcoin with leverage.
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What Are The Lowest Fee Bitcoin Exchanges For Crypto Trading 2021
A transparent and good fee structure is one of the factors to consider while looking for a Bitcoin exchange for crypto trading. Every platform charges a fee to the users, however, as a crypto trader you should opt for an exchange that offers low fees.
Some of the lowest fee bitcoin exchanges are the following:
- fee for and for .
- Binance market takers and makers are both charged 0.10%.
- Phemex taker fee employed by the exchange is 0.075% and -0.025% for market makers.
- PrimeXBT both market takers and makers are charged 0.050%.
- Deribit fee for market takers is 0.075% and for market makers is 0.025%.
- CoinFLEX taker fee charged is 0.06%, whereas maker fee charged is -0.02%.
As a crypto trader, make sure you do not overlook the security protocols offered by an exchange while looking for low fees.
Follow for Crypto Content
How To Start Crypto Margin Trading
To start crypto margin trading, youll first need to select a broker or an exchange that provides the service. Some of the best crypto exchanges that offer margin trading include Binance and Kraken. Then sign up to an account and complete any KYC checks. Most exchanges will require proof of identity if they also offer fiat exchange, however, there are some, such as Prime XTB, which have no KYC checks. Next, visit your settings. There will usually be an option to switch your account from spot to margin trading. In some cases, youll then need to transfer tokens to your margin account.
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What Is Bitcoin Leverage Trading
Sometimes referred to as margin trading, leverage trading is one of the most attractive things about online Bitcoin trading. With this leverage option, traders can borrow funds from their crypto broker to amplify their buying/ selling power and increase their potential returns.
This way, traders with small capital can participate and take full advantage of leverage trading to open larger positions online in the Bitcoin market.
How Does Bitcoin Margin Trading Work
In most cases, the exchange provides loans to the traders so they can enlarge their capital to be used for margin trading. This way, traders can open positions with high leverage. The exchange doesnt have many risks since every position has its liquidation price, which is based on the level of leverage.
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Are There Many Crypto Exchanges That Allow Margin Trading
The top crypto margin trading exchanges that allow margin trading include Kraken and Binance, but there are more to choose from. However, availability does vary by location. Some popular exchanges, including eToro and Coinbase, have suspended crypto margin trading at times due to volatility in the market.
Cryptocurrency Spot Markets With Slight Leverage
Product: cryptocurrency-to-fait and crypto-to-crypto exchangeMin. Investment: 20 USDSettlement: Bitcoin or fiat, depending on positionInitial margin: 20%
Kraken.com Bitcoin magin trading in the US is available in all U.S. states except New York and Washington, as they dont hold the required licenses there yet.
The platform is considered the most secure Bitcoin trading site ever. Kraken has been around since 2011 and in all these years there has never been a serious hack where customers have actually lost money.
The management is also considered real Bitcoiners, i.e. crypto-currency enthusiasts from the very beginning, who attach importance to remain true to certain principles, which Bitcoin in particular stands for.
Product: cryptocurrency-to-fait and crypto-to-crypto exchangeMin. Investment: 0.001 BTCInitial margin: 33.33%
Coinbase Pro Bitcoin margin trading in the USA is available in 23 states:
Wisconsin, Connecticut, Maine, New Jersey, Kansas, Illinois, South Carolina, New Hampshire, West Virginia, Arkansas, Wyoming, Georgia, Nebraska, Utah, North Carolina, Massachusetts, Oklahoma, Arizona, Virginia, Texas, Florida, Colorado, Oregon.
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Best Margin Trading Crypto Exchanges And Platforms
In this article, we will analyze some of the best cryptocurrency margin trading exchanges and platforms.
The rise of the cryptocurrencies made market speculation available for masses as traders didnt need brokers to invest anymore. A stable internet connection and an account on a good Bitcoin trading siteare now the only two things needed to start trading.
There are a lot of centralized crypto trading sites battling for a piece of the market, but not all of them offer the same services to their clients. This article will cover four of the most notable trading platforms for cryptocurrency margin trading.
Best Crypto Margin Trading Exchanges Compared
Disclosure: This post may contain affiliate links, which means we may receive a commission if you click a link and purchase something that we recommended. Read about Affiliate disclosure here.
The best crypto margin trading exchanges:
|One of the best user interface and customer support in the market Offers a number of unique products|
|One of the most secure platforms A good choice for US residents|
|One of the top exchanges in the market High liquidity platform|
|Easy and simple to use Offers a number of unique products.|
Note: 10x means 10 times. For example, while placing a 10x margin spot trade a user needs to keep $1 as margin and can place the order worth $10. Here the exchange will lend $9.
We all know that cryptocurrency markets are the most volatile market in the world. Therefore, one of the best ways to make money in the crypto sphere is by trading cryptocurrencies.
Usually referred to as day trading, it can be highly risky and rewarding at the same time. To make life changing money through trading, a trader needs to be competent and use different trading methods.
Just for a head start, margin trading is a form of trading in which you trade with borrowed money. To borrow this money, you need to have some collateral. This method of trading with borrowed money is also known as leverage.
In simple words, it is like borrowing money and investing it in cryptocurrencies.
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