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The week 12 lecture by professor @stream4u was quite instructive on margin trading and crypto leveraged tokens trading. I was able to grab a few things which include:

• The concept of crypto margin trading
• Focal points on planning for margin trading
• The concept of leveraged tokens trading in crypto
• Focal points to consider in planning for leverage tokens trading

What Is Margin Trading?

Margin trading refers to system or form of either buying or selling a cryptocurrency in expectation of higher gains but with the ability to make use of a sort of 'borrowed' funds or funds provided by a third-party (which can include the exchange itself) to undertake bigger trade positions as a result of the greater purchasing power you now have due to the 'borrowed' funds and which would now give you higher returns if your prediction should go right, even with your little capital investment which could even be a multiple number of times smaller than the funds made available to you by the exchange or third party to undertake the trade.

To give an illustration:

Exchanges could offer margins on different leverages that gives you an opportunity to buy higher than your capital. A 10:1 leverage means you can buy 10 times the actual capital you have.

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1) Opening a trade

I have $10,000 in my margin account but decided to open a trade by going long and buying $100,000 worth of BTC with the 10:1 leverage provided by the exchange.

2) Closing the trade

After my selected time frame the price of BTC had increased by, say, 20% and I decided to close the trade.

3) Calculating my profits

By buying I did rightfully predict that the price would go up. To calculate my gains:

Crypto	Opening price	Closing price	Comment
Bitcoin	$54,000	$64,800	20% increase
Asset	$100,000	$120,000	20% gain
Profit analysis	$10,000 in asset	(10,000 + 20% of $100,000)= $30,000 in asset	$20,000 gain

Key Terms In Margin Trading

• Limit:is an order placed for your trade to only be executed at a particular price point
• Stop loss:is an order placed for your trade to be closed at a certain point if the trade is going against your prediction
• Take profit:is an order placed for your trade to be closed at an exact profit point
• OCO:'One Cancels the Other' type of order allows you to either 'take profit' and cancel 'stop loss' or vice versa.

How To Plan For Margin Trading

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The following points are important in planning for margin trading:

1) You should not plan to hold a position for too long due to high level of volatility in crypto
2) Plan to trade on intraday with minimal time frame charts, like 5 to 15 minutes
3) You should plan for little leverages with small gains and get ready to square off your position when necessary
4) You should be ready to close your trade when it is necessary and don't allow yourself to be carried away by profits
5) You should be ready to avoid the temptation of double down tactics when you are losing in which case you overlook a failing position with hope of a price bounce back
6) You should be ready to avoid fixed beliefs and dogmas about certain coins and go with technical analysis
7) You should learn the usual trend of bull, flat and bear cycles in cryptos and plan accordingly

Exchanges That Offer Margin Trading And The Margins They Offer

• ByBit:This is a Singapore-based crypto margin trading exchange which has become one of the most popular choices. It supports such coins as BTC, USDT, ETH, XRP and EOS. Its leverages are as high as 100X. Also, it offers a $90 bonus for joining.
• Binance:This is the largest crypto exchange in the world. It has the highest trade volume and has crypto margin trading enabled. However, you must complete a KYC and must not be resident in a blacklisted country. There is as much as 5X leverage.
• FTX:FTX offers up to 101X leverage. The FTX Insurance Fund and 3 Tier Liquidity Protocol make for high liquidity. Trading fees are marginal and lending rates vary.
• BitMEX:BitMEX is a crypto exchange which has risen to popularity within a short time and offers margin trading options. It is not available for US users and offers margin trade for six currencies including Bitcoin with up to 100X leverage.
• Huobi pro:This exchange is based in Singapore with offices in Hong Kong and requires KYC for verification. Offers up to 5X leverage for BTC.
  Others include Poloniex and Kraken.

What Is Leveraged Tokens Trading?

Before we can more easily comprehend the meaning of leveraged tokens trading it is necessary that we understand what leveraged tokens are in themselves. A leveraged token is a way of representing either the upward or downward trend of a particular cryptocurrency in the market with a separate token on its own. Both the cryptocurrency and the leverage token on its own are both coins in their respective rights and can be acquired. Furthermore, the leveraged token could be represented in a multiple number of times which amplifies the factor into which the gains or losses accruable to the investor would be multiplied into.

To that effect, leveraged tokens trading refers to the act whereby a crypto investor consciously while predicting the upward or downward trend of a coin in the market decides to purchase the leveraged token of that particular coin which may have been made to represent either the upward or downward motion of the coin in the market and with a particular leverage.

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It should be noted that the calculation in leveraged tokens trading is not exactly exponential. However, with leveraged tokens trading one can tactically avoid liquidation of his account (as could be the case in margin trading). Instead the leveraged token is reduced to the extent to which you have incurred losses and no other underlying assets of yours are affected (as in margin trading). A leveraged token can be represented as ETH3BULL or ETH3BEAR where these symbols represent an upward movement of the Ethereum with a 3X leverage and downward movement of the Ethereum with 3X leverage. In some exchanges like FTX, when the price trend of Ethereum goes up by 1% the ETH3BULL goes up by 3% while the ETH3BEAR goes down by 3%. Equally, the ETH3BEAR goes up by 3% when the price of Ethereum goes down by 1% and the ETH3BULL goes down by 3% at the same time. However, the 3X leverage will allow you to buy as much as three times the amount you have to invest.

How To Plan For Leveraged Tokens Trading

Some important points are necessary to be noted when planning for leveraged tokens trading as an investor. Some of which include:

• You should set a target for yourself and follow all the laid down rules of the exchange
• You should make a conscious effort to understand the marginal fees and charges of the exchange and plan on how to invest just a little fraction of your total assets at a time
• You should learn to eschew greediness and plan on small profit at the time
• You should be ready not to hold your position for longer than a day as leverages rebalance every 24 hours
• Learn how to undertake proper technical analysis and also follow tweets and communities to look out for possible sentiments of popular figures which could affect investment into a particular crypto and therefore possibly cause an immense price uproar or downfall
• Don't plan to hold too many of them at a time as this could cause a lot of distraction and eventual losses
• Plan on understanding and leveraging on a short-term basis to maximize profits and minimise losses

Exchanges That Offer Leveraged Tokens Trading And The Leverages They Offer

• Binance:as the world's leading crypto exchange it offers the Binance Leveraged Tokens (BLVT) which may not be withdrawn to wallet but remains in your binance account. Their leveraged token leverages vary and rally between 1.25X and 1.5X.
• Pionex:the exchange has a high leveraged tokens market which can go as much as 3X in leverages. Also, they possess a unique leverage rebalancing system. Equally, there are trading bots which can be used on this exchange.
• FTX:This was the first to implement the strategy of issuing and implementing leveraged tokens trading and has a mechanism to reinvest or sell off your profit to avoid liquidation. They offer up to 3X leverages on leveraged tokens trading.
• Bittrex:This exchange offers leveraged tokens with up to 3X leverages. However, this is not available to EEA and EU traders on this platform. Leverages are rebalanced and reinvested every 24 hours to accumulate higher gains in run periods.
• Poloniex:leveraged tokens which are issued by FTX can be traded on Poloniex. They can come with as much as 3X leverages and offer a safer form of leveraged exposure into the market.