You only have a small amount of money, but you want to trade cryptocurrencies. What if we told you there was a way to increase your long and short positions on Bitcoin by 2X, 5X, 10X, or even 100X without having to have the capital to open such positions? Welcome to Bitcoin trading on margin.
This article will talk about the best platforms for trading bitcoin with borrowed money. We’ve also given you a list of the best tips for trading bitcoins on margin.
- 1 Let’s understand what Crypto Margin Trading is?
- 2 Pros and cons of Crypto Margin Trading
- 3 How does Bitcoin margin trading work?
- 4 The best platforms for Cryptocurrency Margin Trading
- 4.1 1. Binance Margin Trading
- 4.2 2. Bityard Margin Trading
- 4.3 3. Kraken Margin Trading
- 4.4 4. BitMEX Margin Trading
- 4.5 5. Poloniex Margin Trading
- 5 Is Crypto Margin Trading Safe?
Let’s understand what Crypto Margin Trading is?
Most people call it “Bitcoin margin trading,” and it’s seen as one of the most profitable and risky ways to trade. It lets you borrow money from the exchange and use it to trade.
To get started, all you have to do is join a cryptocurrency exchange development platform and turn on your margin trading account.
Then, you can ask for a loan through the platform and use the money you get to trade.
For example, if you opened a margin trading account for Bitcoin with a 2X leverage and the price of Bitcoin went up by 10%, your position will make you a 20% profit because of the 2X leverage. If they hadn’t used leverage, the ROI would have only been 10%.
Margin leverage can also go up to 25X or even higher, but the risks are higher. The same job will now make 250 percent more. (Rather than 10% with no leverage).
Pros and cons of Crypto Margin Trading
To make a long story short, trading virtual currency on margin could be very profitable, give you access to more money, help you diversify your positions, and teach you how to trade. There is a lot of money to be made because the trading positions are worth more than they cost. After all, margin trading is a great way to diversify because it lets traders open multiple positions with a small amount of capital.
But trading cryptocurrency on margin has its downsides, just like any other way to trade. It’s very risky, goes up and down a lot, and can lead to big losses. In forex trading, unlike regular trading, a trader can lose more than they put in.
How does Bitcoin margin trading work?
- Once you’ve opened your margin trading account and logged in, you’ll need to put money into it.
- Next, you can apply for a BTC loan using the money you already deposited as collateral.
- You’ll have to pay interest every day, and the amount will change often based on the exchange rate.
It’s important to remember that the exchange doesn’t pose a lot of risks by itself, since each position has its own liquidation price that depends on the level of leverage.
Isolated and Cross Margin Trading
Before we talk about the best Bitcoin margin trading platforms of 2022, let’s quickly talk about what isolated margin trading and crypto cross margin trading are and how they differ.
Isolated Margin Trading
An isolated margin lets you limit the risks of a trade by putting a limit on the amount of margin at each position. So, if the liquidation price of your fund is reached, you will only lose the money for that position.
Cross Margin Trading
When you cross-margin trade, you spread the value of all of your assets across all of your open positions in your margin account. It can keep the position from going bankrupt because other positions can help the position that is losing money. Cross margin trading is most popular with professional traders and investors who want to protect their existing positions.
The best platforms for Cryptocurrency Margin Trading
There are many options on the market, and we’ve put together a list of the 5 best margin trading platforms for bitcoin based on their features.
1. Binance Margin Trading
Bitcoin margin trading at Binance is like spot trading, but you have to borrow money and the risks are higher. Binance is one of the best places to trade bitcoins on margin in terms of volume. It is also one of the biggest places to trade crypto on margin in the United States. You can cut your trading fees by 25% if you use Binance.
Pros of Binance Margin Trading
- Margin trading by itself
- Cross margin trading
- No fees
- Level of margin
- Maintenance margin
- Protocol for security that leads the industry
- Traders can use Bitcoin, Ethereum, XRP, and other currencies with a 1:3 margin.
- Binance Margin Trading Has Its Downsides
Cons of Binance Margin Trading
- Could be a bit much for someone just starting out.
- All of your orders with a margin go to the spot market.
- Does not accept most common ways of paying
2. Bityard Margin Trading
Bityard, an exchange in Singapore, is ranked as one of the best places to trade bitcoins on margin. They use isolated margin trading, which helps you keep your whole fund safe even when the fund is being liquidated.
Features of Bityard Margin Trading
- Margin trading by itself
- Interface that can be changed and is easy to use
- Market trading fee that is competitive
- Own a license to do business in four countries
- Trading in Isolation
Bityard gives you the chance to use leverage through margin trading. As we’ve already said, isolated margin trading lets you borrow money for each position separately, so you only lose money from that position if it’s liquidated.
3. Kraken Margin Trading
Kraken is a platform for margin trading that is based in the US and offers its services in more than 175 countries. It lets you magnify your trades by letting you use more complex trading strategies.
Features of Kraken Margin Trading
- One of the safest ways to trade crypto on margin in the US
- Charge low fees for trades that use leverage.
Drawbacks Of Kraken Margin Trading
- Only gives a maximum leverage of 5x.
- Verification takes a long time
4. BitMEX Margin Trading
BitMEX, which is based in Seychelles, is one of the best places to trade bitcoins on margin. They give traders on the crypto market a platform that is fast and safe. The platform lets people buy and sell BitMEX futures and swaps.
Also Read This: A Guide To Crypto Banking Platform Development in 2022
Features of BitMEX Margin Trading
- High leverage and access to cash
- Reasonable fees for trading Bitcoin on the side
- Helps keep things secret
- No fees to put money in or take it out.
- BitMEX Offers Isolated and Cross-Margin Trading
BitMEX has some problems.
- User interface that is too old
- Exchange is said to be doing things that are against the law.
5. Poloniex Margin Trading
Poloniex is a platform for margin trading in bitcoin that is based in the Seychelles. It allows lending, spot trading, margin trading, and staking. According to CoinMarketCap, as of March 2021, Poloniex was ranked 13th in dollar value volume for crypto margin trading in the US.
Features of Poloniex Margin Trading
- High cash flow
- No verification needed
- Chatbox is a part of
- The Poloniex Market
Your initial margin and maintenance margin levels determine your leverage at Poloniex, and you can get up to 100X leverage. There are different levels of fees, and you can also apply for the silver and gold levels.
Cons of Margin Trading on Poloniex
- Hacked in 2014, and 12% of user assets were lost.
- High rates of interest on loans
Is Crypto Margin Trading Safe?
Before you make a margin trade on any trading platform, make sure you know that both gains and losses are magnified. When the markets for crypto move in your favor, you’ll make more money. On the other hand, if the price moves in the opposite direction of what you thought it would, you could lose a lot of money. So, trading on margin is not a good idea for people who are new to trading cryptocurrencies.
As a margin trader, you must also keep a certain percentage of the value of your position on the exchange at all times in order for that position to stay open. If you lose more than a certain amount, called the liquidation price, on your position, your order will be closed automatically.