When it comes to cryptocurrency trading, margin trading has become really popular and a lot of crypto exchanges are adopting margin trading as one of their features. Every trader a lot of times wish they had more capital to invest in a cryptocurrency asset for trading in order to make even more profit from using more capital.
When a crypto trader is done with technical analysis of a particular cryptocurrency and is confident that the cryptocurrency will go in an upward direction, the trader always wish to have more money to make the trading move in order to capitalize on the price increase and make more profit. However, this is not always the case because no trader always have the enough capital and will always want more to make even more profit.
Margin trading is simply the act of borrowing extra funds from any platform or crypto exchange that provides margin trading so as to have more trading capital to invest in a particular cryptocurrency asset in order to increase profit. Simply put, margin trading involves a crypto trader borrowing a cryptocurrency asset to add to his/her original capital to have more capital to make bigger profit from the trade.
For instance, crypto trader A who wants to perform a margin trade on Binance has $200 capital and wants a capital of $1000, the trader “A” decides to borrow extra $800, making it $1000, while using his/her original $200 as capital. This becomes a 5x margin trade which means that if the price of the cryptocurrency increases, the trader “A” would make a 5x profit, same goes to when the price of the cryptocurrency decreases, the trader “A” would make a 5x loss and can be liquidated.
When it comes to margin trading, not every crypto exchange supports margin trading, however, margin trading is supported in a lot of the top crypto exchanges. Some crypto exchanges that supports margin trading are; Binance is without a doubt one of the biggest crypto exchange and ecosystem if not the biggest, offering margin trading up to 5x on large cap cryptos. Kraken is another big crypto platform, offering margin trading up to 5x on large cap cryptos. Poloniex is one of the top crypto exchanges offering margin trading up to 2.5x. BitMEX is also a top crypto exchange offering margin trading especially on BTC with up to 100x leverage. Bityard – Bityard is also another very good platform offering margin trading up to 125x
Margin trading involves a lot of high risk that is why it is important to plan for trading before venturing into crypto margin trading. Planning for crypto margin trading requires the trader to First have proper knowledge of the different types of analysis such as fundamental analysis, technical analysis and sentimental analysis, so as to be able to make better price forecasting which is essential when it comes to crypto margin trading.
