Bitcoin margin trading is one of the most popular forms of crypto trading and is sought-after by many crypto traders, especially those who are experienced and have traded before. However, this form of trading has attracted quite a large audience of crypto traders who are new to the crypto space as well.
While this type of trading is exciting it is also quite risky. This is why, it is important for beginners to be familiar with the concept of margin crypto trading and choose a secure exchange before they step into it.
There are several aspects one should know about margin trading so they can avoid the complications and have a good experience of trading with leverage. It is also essential to know that beginners should always take their time and learn about the crypto space and more, whether they are looking to buy, sell, hodle or trade crypto.
Similarly, people who are new to trading and want to start margin trading should have the following information.
Understanding What Bitcoin Margin Trading Is
As mentioned earlier, margin trading is one of the most popular forms of trading and is supported by several crypto exchanges. However, since it is a complex and somewhat risky form of trading, it is crucial beginners learn about the concept first and then dive into it.
Margin crypto trading is also known as leverage trading. This type of trading allows the traders to borrow funds from a broker, where the borrowed amount is known as leverage. The borrowed funds allow the traders to open bigger trading positions without using most of their personal fund.
However, opening bigger trading positions does not guarantee profits for the traders. In fact, margin trading Bitcoin for beginners or experts can go either way, which means they can enjoy big financial profits or they can experience huge financial losses. Understanding the concept of Bitcoin margin trading and choosing a secure exchange can increase the chances of getting profits, even though they are not always guaranteed.
How Margin Trading Works?
Margin crypto trading for beginners can be understood more clearly by considering an example of how it works. As a novice trader, you should also know that different exchanges offer different leverage ratio, which can be as minimum as 5x or as high as 250x.
Let’s take an example of how this form of trading works.
Crypto traders can choose the amount of leverage before they begin. As a trader, if you opt for 10:1 leverage ratio then you will be able to open a trading position for $10,000. Out of this amount, you would only be required to invest $1,000 from your own pocket and the rest will be borrowed.
Top Platforms Supporting Margin Trading
As mentioned above, Bitcoin margin trading is supported by several cryptocurrency exchanges in the market. However, not all the available exchanges are suitable for people to use, especially if they are beginners.
Therefore, if you are new to the crypto space and want to choose the best platform to trade with leverage then here are some of the top exchanges that support this form of trading.
- Phemex
- XENA
- Bitfinex
- PrimeXBT
- BaseFEX
- Kraken
- Bybit
- KuCoin
- Poloniex
- Binance
- BitMEX
Difference Between Margin Trading and Other Forms of Trading
Margin crypto trading is the most well-known forms of trading and is different from other forms of trading for several reasons. If you are interested in starting margin trading then you need to know how it is different and what key factors it offers to the traders.
Here is how Bitcoin margin trading is different from the rest.
- No specific expiration date for positions that are opened by margin traders
- Price of digital currency pairs is similar to spot market
- Traders have to pay daily interest payments
- Variety of exotic trading pairs available in margin trading
Few Helpful Tips for Margin Traders
Trading Bitcoin for beginners can be complex, difficult and even intimidating to some extent, especially if they do not have any helpful or relevant information. This is why it is essential for novice traders to know and follow some tips so they can avoid unnecessary problems and obstacles.
Here are some tips for inexperienced people interested in margin trading.
- Always pay attention to market movements
- Always start margin trading with a small amount of money
- Do not go all in while trading for the first time
- Know about the fee you will be required to pay
- Learn about fundamentals of margin trading
- Learn about liquidation
- Learn about risk management
- Learn about short-term trading
Key Takeaways!
Bitcoin margin trading can be beneficial and exciting, yet intimidating and risky, especially for people who are new to the crypto space. If you are also a novice trader and want to trade with leverage then you should first have the information mentioned above.