Crypto Margin Trading – Tips and Strategies
by Kamil S
There are many ways of trading crypto to choose from, and margin trading is one of them.
Trading crypto on margin allows you to open positions that greatly exceed your real account balance – by borrowing funds to increase your buying power.
In this short article, we’ll tell you what crypto margin trading is and how it works.
Crypto Margin Trading Explained
Crypto margin trading is an investment practice that allows you to increase the amount of money you’re able to trade by borrowing funds from either exchange traders or the exchange itself.
This way of trading crypto offers an opportunity to open a position that in the end can be a lot more profitable than you would otherwise be able to access.
Although this practice may seem like a compelling trading opportunity, it carries high risks and is generally recommended for confident traders who understand the behavior of the crypto market and are able to make accurate predictions – price-wise.
If you’re completely new to crypto trading, we suggest you try other trading strategies first. There are plenty to master. If you feel like learning more about margin trading, skipping our comprehensive guide What is Margin Trading? would be a crime.
How Does it Work?
Crypto margin trading is done on exchange platforms. The rules and requirements for this type of trading are different and vary between platforms, but the main principles remain the same.
What are those?
A trader needs to commit a certain percentage of the total order value, that is, margin. They also need to choose a leverage level that can range freely from 2x to up to 100x.
Here’s an example. If a trader wishes to make a $5,000 trade with a 5x leverage – i.e., 5:1 – they will need to put down at least 20% capital, or $1,000.
Most importantly, the higher the leverage, the closer the liquidation price to the entry price. To break the previous sentence into simpler terms, this principle means far less room for error. Should the market price reach a preset threshold, the trader’s initial funds will be force-sold by the exchange.
That is why margin trading is recommended for more experienced crypto traders. High leverage and highly volatile crypto markets are not your friends if you’re making your baby steps as a trader.
Be a Part of the Fintech Revolution
Crypto margin trading is available on most exchanges, including CoinMetro. But one thing is sure – most crypto exchanges are not CoinMetro.
We innovate and educate. We guide you through every step of the way and move crypto forward. We are trying to revolutionize the fintech industry by making it accessible and transparent.
We offer you a Margin Trading platform with advanced options and features. You can have a quick look at the demo version and open a live account later.
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