Do you want to trade cryptocurrencies but only have a little money? What if we told you there was a method to multiply your long and short Bitcoin positions by 2X, 5X, 10X, or even 100X without holding the cash necessary to do so? Greetings, and welcome to Bitcoin margin trading!
This article will discuss the top bitcoin margin trading platforms among the different crypto margin trading platforms available in the United States. Just for you, we’ve included a list of the greatest margin bitcoin trading advice!
What Is Margin Trading in Bitcoin?
Margin trading (or Bitcoin margin trading, as most people refer to it) enables you to trade with leverage by borrowing cash from the exchange. It is considered one of the most successful and risky trading tactics.
To get started, just register with one of the exchanges and activate your margin trading account.
Then you may apply for a loan on the site and trade using the money you’ve borrowed.
For example, if you created a Bitcoin margin trading account with a 2X leverage and the price of Bitcoin rose 10%, your position would deliver a 20% profit due to the 2X leverage. It would have only been a 10% ROI if there had been no leverage.
Margin leverage may be as high as 25X or greater, but this comes with significant hazards. The identical investment will now return 250 percent (instead of 10 percent with no leverage).
Crypto Margin Trading’s Benefits and Drawbacks
To keep a long tale short, margin trading in cryptocurrency may be quite rewarding, as it allows you to get access to more cash, diversify your holdings, and discover new trading tactics. The high income is due to the increasing relative value of the trading positions. After all, margin trading allows traders to create many positions with a small amount of investment money, perfect for diversification.
Cryptocurrency margin trading, like any other trading approach, has its drawbacks. It is exceedingly dangerous, highly volatile, and may result in substantial losses. Unlike traditional trading, a trader might lose more than their original investment.
What is the Process of Bitcoin Margin Trading?
You’ll need to deposit some dollars once you’ve activated your margin trading account and signed in.
You may apply for a BTC loan using your deposited cash as collateral.
Every day, you will be charged interest, which changes regularly based on the currency rate.
It should be emphasized that the exchange itself does not offer many dangers since each position has a liquidation price determined by the degree of leverage.
Cross-Margin Trading and Isolated Margin Trading
Let’s briefly review the notion of isolated margin trading and the differences between it and crypto cross margin trading before moving on to the top Bitcoin margin trading platforms of 2022.
Isolated Margin Trading: What Is It?
By limiting the amount of margin at each position, an isolated margin helps you minimize the risks of a transaction. If your fund hits the liquidation price, you will only lose the cash from that single investment.
Cross Margin Trading: What Is It?
When you trade cross margin, your whole asset balance is shared across all active positions in your margin account. It may help avert liquidation by assisting the position in a loss. Professional traders and investors who hedge existing holdings use cross-margin trading the most.
Bitcoin Margin Trading vs. Crypto Spot Trading
Before diving into the top crypto trading margin platforms, let’s briefly review what crypto spot trading is and how it differs from margin trading. The most prevalent kind of crypto trading is spot trading, which refers to the direct selling or purchase of a cryptocurrency.
We all know that bitcoin markets are the world’s most volatile. Therefore, trading cryptocurrency is one of the finest methods to earn money in the cryptosphere.
It’s often called day trading, and it can be hazardous and lucrative. A trader must be skilled and employ several trading tactics to earn life-changing money via trading.
Margin trading is the most dangerous kind of trading, and this may also become the most successful strategy of trading if applied appropriately.
To give you a head start, margin trading is a kind of trading that involves borrowing money. You’ll need some kind of security to borrow this money. Leverage refers to the practice of trading using borrowed funds.
If you have $100 and the exchange permits a 10x margin on BTC spot trades, for example. Then you may place an order (long order or short order) valued up to $1,000 in this example. Margin Trading refers to the practice of trading more than you can afford.
To put it another way, borrowing money and investing it in cryptocurrency is the same thing.
However, if the market swings in the opposite direction of your position, the exchange may compel you to sell these assets and liquidate your holdings.
Although margin trading is dangerous in general, crypto margin trading is much worse. As a result, it is a strict NO for novice traders, as experienced traders may also lose a lot of money on margin transactions.
If you’re proficient at traditional day trading, you may start experimenting with margins for crypto trading with lower sums.
Cryptocurrency Exchanges with the Best Margin Trading
The following is a list of the finest cryptocurrency leverage trading platforms:
Binance
Binance is the greatest cryptocurrency exchange globally, with the most liquidity, trading volume, and users. Read the rest of our Binance review here.
Margin trading is available on the exchange, and it is easy to comprehend and implement. To utilize Binance margin trading, you must first pass the identity verification (KYC) process, and your nation must not be on the Binance country blacklist. Residents of the United States can now not utilize Binance’s Margin Trading function.
Furthermore, the exchange maintains a Margin Insurance Fund to protect its overall liquidity. If a trader goes bankrupt during margin trading and his assets are insufficient to satisfy his obligations, the exchange will compensate the dealer from this Insurance Fund.
Both short and long positions might benefit from margin trading. On spot trading, the exchange allows a margin of up to 10x and up to 125x on derivatives trading.
The interest rate on borrowed funds is constantly changing and may be seen here. You may also pay margin trading interest in BNB (Binance in-house token) to save 5% on interest.
Binance now provides Leveraged Tokens as an alternative to margin trading. Traders may use these tokens to enter short or leveraged bets without using margin. A trader who wishes to 3x short Bitcoin, for example, may simply purchase a Binance 3x short Bitcoin leveraged token. Standard crypto tokens and leveraged tokens may be listed on any spot market (even those that do not allow margin trading). Furthermore, an investor who purchases a leveraged token avoids the headaches of maintaining a needed margin with the exchange.
FTX
FTX was founded in May 2019 and is a cutting-edge crypto exchange with many fascinating features. With its 3 Tier Liquidity Protocol and FTX Insurance Fund, the FTX exchange delivers enormous liquidity to its consumers. Read the rest of our FTX Exchange review here.
All roles utilize the same collateral pool by default. Each subaccount has its central collateral wallet, and the account employs cross margining. A user also can use a certain margin on its own. On its goods, the exchange offers leverage of up to 101x.
FTX Exchange, like Binance, provides a variety of Leveraged Tokens. FTX.com does not serve residents of the United States. Residents of the United States must utilize FTX.US.
The cost charged by FTX is already incorporated in the financing rates. This implies that a borrower will pay a somewhat greater interest rate than a lender would. FTX will retain the difference as a margin trading charge. Furthermore, FTX simply charges the standard trading fee.
Kraken
Based in San Francisco, Kraken is one of the country’s major bitcoin exchanges. It is the second-largest exchange (behind Coinbase) that caters to US citizens regarding trading volume and number of customers. To discover more about this popular exchange, read our thorough Kraken review.
Kraken also provides a wide range of crypto coins, catering to US customers. Kraken provides both spot margin and futures trading, and the maximum leverage on these transactions is 5x.
Kraken has outlined the criteria used to decide whether or not a user is eligible for Margin Trading. You may make the same reference here.
BitMEX
BitMEX is a cryptocurrency margin trading platform that has gathered a lot of traction in the cryptosphere in a short amount of time.
It is a dependable product since the team includes experienced developers, economists, and high-frequency algorithm traders. Customers in the United States cannot use BitMex; however, any VPN service may be used to circumvent this restriction.
BitMEX’s signup procedure is straightforward; all you need is your email address to get started, and you can additionally safeguard your cash using BitMEX’s 2-FA authentication tool.
BitMEX now allows margin trading for six cryptocurrencies, with Bitcoin margin trades being the most well-known.
Bybit
Bybit is a specialist derivatives trading platform. The exchange was founded in 2018, and it already has over 2 million registered customers.
Bybit trades a variety of perpetual and futures contracts. The site has begun a test program for spot trading, which will soon be accessible to all customers.
They also offer a free joining bonus of up to $90, which can be used for margin trading. It has one of the lowest fees and does not need KYC. However, to utilize a third-party service like fiat trading, a user must complete KYC on the platform.
Bybit offers a lot of liquidity and market depth. As a result, it is an excellent platform for margin trading.
Bybit provides 100x margins for margin trading. Furthermore, Bybit has its insurance reserves that may be utilized to recoup damages if a trader defaults.
You’ll be utilizing the Bybit mobile app for trading most of the time. The trading engine is lightning quick, and it is the fastest-growing crypto exchange for margin trading. In my thorough evaluation of Bybit, you can discover more about it.
Even for novice leverage trading traders, Bybit is simpler to utilize. Bybit also provides one of the greatest customer services (multilingual) available. Bybit is headquartered in Singapore and has operations across the world.
Huobi Global
Huobi is a global cryptocurrency exchange noted for its multilingual platform and customer service. The exchange’s headquarters are in Singapore, with offices in Hong Kong, Korea, Japan, and the United States. It has been functioning since 2013.
To get started on Huobi, you must first register using your email address and submit your KYC papers. This procedure might take up to two days.
After that, you may start trading and use their margin trade function, which lists many cryptocurrencies for margin trade. Huobi provides a 5x margin for spot trading and a 125x margin for derivatives trading.
KuCoin
KuCoin is a fantastic crypto exchange that provides a broad range of services and crypto tokens. This platform houses the majority of the low-market-cap gems.
I couldn’t leave this platform off my list of top-margin trading crypto exchanges because of its dynamic user interface and strong platform liquidity.
KuCoin provides a 10x margin on spot trading and a 100x margin on derivatives trading. KuCoin, like Binance and FTX Exchange, also provides a variety of Leveraged Tokens, which are a superior alternative to margin trading since they do not include the risk of asset liquidation.
Is Trading Crypto Margin Safe? Bitcoin Margin Trading’s Risks
Make sure you understand how leveraged trading increases earnings and losses before placing a margin transaction on any trading platform. You’ll make more money if the crypto markets move in your favor. On the other side, if the price swings in the opposite direction of your forecast, you’ll likely lose a lot of money. As a result, anybody new to crypto trading should avoid margin trading.
It’s also worth noting that, as a margin trader, you’ll have to keep a specific proportion of the value of your open position on the exchange at all times for it to stay open. Your order will be immediately terminated if you incur a loss on your position that reaches a specified level, known as the liquidation price.
Only 23 states in the United States permit margin trading.
Margin trading is only available to a small group of traders from 23 US states. Coinbase Pro is also available in the following 23 states due to licensing requirements: New Jersey, West Virginia, Colorado, South Carolina, Wyoming, Illinois, New Jersey, Arkansas, Connecticut, Oklahoma, Utah, New Hampshire, Nebraska, Texas, Massachusetts, Virginia, Florida, Maine, North Carolina, Georgia, Wisconsin, Kansas, Arizona, and Oregon.
What if I use a VPN to trade margins?
The majority of US traders wonder where they can trade bitcoin with leverage.
Almost all cryptocurrency exchanges and trading platforms state that US nationals and residents are prohibited from engaging in crypto margin trading in their terms of service.
When individuals and residents of the United States register with crypto-margin brokers, they are informed that this business is not permitted in their jurisdiction. A US person may technically get around this by utilizing a VPN. However, doing so would be a blatant breach of the law, and it is not recommended. If the platform learns that a trader is based in the United States, your account and money may be frozen. There may also be legal action taken against the merchant.
Trading Cryptocurrency/Bitcoin Margin Tips
If you’re a new trader, think again
Margin trading is generally not for you if you’re new to crypto trading or cryptocurrencies, and it’s a high-risk strategy that’s best suited to seasoned investors.
Always Begin in little increments
Margin trading on the first day? Begin small. Get the essential confidence before diving into the roaring waters of leveraged trading.
Don’t go all-in at the same time
If you’re not confident in your trading abilities, break your stake into sections and establish a price ladder. You may reduce risk while averaging down the position’s entry price. Set up a ladder of take-profit levels in the same way you did for taking a profit.
Extremely volatile
Extreme volatility in both directions may occur in cryptocurrency trading. The danger is that the depth will get close to our liquidation value, and it may happen when the leverage is large and the liquidation value is near.
Risk Assessment
Set specific risk management principles and avoid excessive greed while bitcoin margin trading. When deciding how much you’re prepared to risk, keep in mind that it may all be gone. Set unambiguous levels for closing trades, profit targets, and, most crucially, stop-loss targets.
Conclusion
The advantages of leveraged trading are obvious, and another big advantage is the security factor. Even the greatest bitcoin margin trading platforms, however, include risk. Do your homework beforehand if you’re new to cryptocurrencies and crypto trading and want to margin trade cryptocurrency. Compare the costs and features of several margin trading platforms and the benefits and drawbacks to choosing the one that best meets your requirements.