The popularity of the bitcoin margin trading is rapidly growing. The best part of the margin trading is that it allows you to carry out trading despite low capital. When there are not enough funds with you, you can still use the tool called margin trading.
You can lend some money from the cryptocurrency exchange or borrow from a broker to boost the buying power. There is a myriad of benefits that you can reap with margin trading. With profits come many risks.
CEX.IO Broker is a professional trading environment that offers a rich interface and easy navigation for new to professional traders. We help people from different walks of life earn more on their regular income through smart trading choices.
We encourage traders to have multiple trading accounts. Every account can be used for a different strategy or to carry out trading in a different style. We adhere to the security standards and offer excellent customer support to solve customer queries in no time.
You can switch from one account to another without having to log in to each account separately.
What is crypto margin trading?
As per https://broker.cex.io/, the crypto trading is simple that you are borrowing money to trade cryptocurrencies. The amount that you borrow from the broken would be with a lower interest rate.
On the flip side, when you borrow the amount from a cryptocurrency exchange, the interest rate would be pretty high. The best thing is that you can reap huge profits if the market is in your favor. If the market is not in your favor, it results in increased losses when you buy the cryptocurrency with a lot of confidence that it would go up.
If you spend USD 1000 to open the trading account and realize that you would reap profits if you had enough money, you borrow funds from others than the funds you have in the account. When you borrow another USD 1000, a total of USD 2000 would be put to buy the cryptocurrency. When the market is high for the cryptocurrency you have purchased, you can sell to make double profits.
Which is the best place to carry out cryptocurrency trading?
The trading websites restrict US people to take part in this type of trading. The trading sites used by the US people must abide by the rules set by the SEC. It is not so easy for all the trading sites to comply with those rules.
Many people tried to come up with an alternative way to carry out margin trading in the US; however, they are seized by the FBI. The trading sites started to ban US citizens from taking part in margin trading to avoid legal issues.
How does the crypto trading work?
You can better understand the concept of margin trading by understanding the leverage concept. The leverage is the buying power you hold to buy the cryptocurrencies on margin.
The leverage that you have would be different from one cryptocurrency exchange platform to another platform. For instance, if the cryptocurrency platform offers the leverage at the ratio of 2:1, you must hold twice what is in your trading account.
Say, for example, if the trading account has USD 10,000, you must place the trade that is worth of USD 20,000. If the leverage of the cryptocurrency exchange is 20:1, you must hold 20 times more money in the trading account.
If the market has an increase in the price of cryptocurrency on which you are trading, it helps you earn huge profits. On the other hand, if the market is moving down, you would lose all the investment.
What are the two principal options available for margin trading crypto?
This is known as opening or stepping into the long position. You would purchase the cryptocurrency with an assumption that its price would go high in the future. This primary aim of doing this is to reap profits when the market goes up.
This is known as opening and stepping into a short position. You would sell the cryptocurrency that you have in the account to predict that the price of it would go down soon. The main aim is to sell now and buy when the price is low to reap profits.
What is the difference between regular trading and cryptocurrency trading?
In conventional trading, you would buy and sell the currencies on the exchange with the funds that you have with you. You would buy the cryptocurrency at a low price and wait until the cryptocurrency market would go high to sell it. This can be either for the short-term or long-term. However, either way, will help you reap profits.
When it comes to margin trading, it helps you to borrow some money from the cryptocurrency exchange and use this money for trading and boost the buying power. It is done to reap profits in the future.