INTRODUCTION
hello everybody, this is my entry for the assignment given by professor @stream4u on the topic of crypto margin trading and crypto leveraged tokens trading. I hope everyone enjoys my post. now let's get to the main course shall we?;
QUESTION 1: what is crypto margin trading?
Definition:
Crypto margin trading in my opinion is the type of crypto trading where we trade coins, but the trades are sponsored almost totally by a third-party individual or institution.
Advantages of crypto margin trading
- smaller capital, bigger trades:
It gives users a chance to open bigger trades with less money/ funds in the user's personal wallet - more profit:
since one is given the opportunity to place trades with more money than she/he has, the user stands to gain even more profit if the trades go well. - borrowing from the right source:
Instead of using so many documents and going through so much stress to file for a loan just so you can place a trade, you're given the same opportunity just with less stress, as the exchange platform offers to lend you capital. - lower interest rates:
some crypto exchange platforms have interest rates that really are not noticeable, and that would not affect your profit much.
Disadvantages of crypto margin trading
- it's risky!:
margin trading can be very risky, following the high volatility of the crypto market. even though this could also be an advantage, remember that most of the trade was sponsored by a 3rd party, so in a way, losses could be more lethal in general. - Margin calls:
A margin call is what happens when the money in the crypto account/ wallet falls below the agreeable threshold of the exchange platform, forcing the user to add more money so that he/she can bring the account back to a healthy level, in order to be able to make trades in the future. it could mean liquidation of the account, but it occurs only on margin trades.
My little insight on crypto margin trading.
It's just like when you borrow money from the bank or from a friend, to place a trade, in order to pay back after the trade position closes. The difference now is that it is the platform where the margin trading is being carried out on that lends the money to buy the assets or coins.
In crypto margin trading, money can be made really fast, but just as fast as money can be lost, because of the volatility of the crypto market. With the ability to borrow, you can trade assets worth about 3x-10x of your actual crypto worth depending on the exchange platform in use.
Using crypto margin trading, it is not advisable nor wise to hold a trade for a long time, because the crypto market could wipe away 10$ in a matter of seconds when put in a wrong trade. As professor @strem4u advised in the lecture, instead of waiting on one margin trade, to make huge profits off that one trade, it is advisable to take little profits on each trade, but be diversified on the assets you trade on.
QUESTION 2: How to plan for trading in crypto margin trading
The following is my own opinion on what plans you should take before going into the crypto market for crypto margin trading:
Decide the kind of trader you are:
What kind of trader are you, would you like to trade all day, spend day and night on the exchange platform, placing trades in order to make more profit, or are you the lazy kind, that just places one or two in the morning, one or two in the night and goes to bed after closing the positions. Proper planning should entail you knowing yourself, and the kind of trading you'd be comfortable with. this would help you to be more organized, and eliminate fatigue and unnecessary decisions when trading.Set your profit goal:
how much would you like to make from each trade? how much would you like to make each day from trading with crypto margin trading? what is your profit goal like at the end of the month? these are relevant questions I think one should answer and note before heading into the crypto market. Taking note of how much your aim is, be it daily weekly or monthly, sets up a target for you, and helps you earn adequately.Decide what you’re willing to lose for each trade:
When planning, you have to decide also your profit-loss percentage. this means you have to know and decide when to pull out of a trade. whether you're in loss or not, you need to decide on a limit, in which when the trades get to that point, you close the trade. Following this strictly would eliminate greed when trading.Jot down/ take notes on all you’ve decided:
this might be the most vital part of the whole planning. Getting a trading journal seals the deal! it reminds you of all that you have planned and helps you not to go against them in a way, depending on how you took down the jottings though.Never use all your money for a trade:
when placing trades, you have to be cautious with how much you are putting into that trade, the whole amount you put in should be about 10 percent of your total crypto wallet worth at every time. This strategy is very helpful because in case you see yourself in a sequel of bad trades, you would not end up losing all your money at once.
QUESTION 3: Crypto exchange platforms that provide the margin trading option, and the margins they provide respectively.
Here are some crypto exchange platforms that provide the crypto margin trading option:
BINANCE:
In my opinion, binance is the best crypto exchange wallet, it provides so many options, and is really diversified. It recently just launched the margin trading option, and to margin trade on binance, you have to go through kyc verification. One other thing to keep in mind is it’s long blacklist of countries, if you are in a country in binance’s blacklist, you wouldn’t be able to margin trade on the platform.
. Margin offered:
The margin offered by binance is 1-125x, and can be repaid using the platform’s own unique coin known as BNB.BYBIT:
This is another platform that offers margin trading, it is fast, and does not need kyc verification to start margin trading using the platform. Bybit is really growing fast, and it is no wonder why because it is a pretty easy platform to access. It also has a multi-lingual support system too.
. Margin offered:
Bybit offers a margin of 100x at most, which is pretty impressive.FTX:
ftx is a rather new platform for trading and buying cryptocurrencies, it started 2019, and since then has been rather flourishing. It is unique in the sense that it makes coin liquidity easier for users, as it provides users with a 3 tier liquidity protocol and it's own insurance fund.
. Margin offered:
ftx provides a leverage or margin of 101x.BITMEX:
Bitmex offers crypto margin trading too, it is not available for people trying to access the platform from the U.S, but even with this, bitmex is still gaining ground as one of the reliable exchanmge platforms that one could trade with.
. Margin offered:
Bitmex offers a margin of 100x for bitcoin which is it's highest leverage on all the coins it offers up for margin trading.
Below is a simple table of the names of the crypto exchange platforms and the margins they offer respectively:
crypto exchange platforms that offer margin trading | margin provided by platform |
---|---|
Binance | 125x |
Bybit | 100x |
Ftx | 101x |
Bitmex | 100x |
QUESTION 4: What is leveraged tokens trading?
Definition
first of all, I will start with defining leveraged tokens in my own terms; they are crypto tokens that enable the user to trade them with little risk of total liquidation whilst not having to manage or maintain margin requirements. so we can say leveraged tokens trading is the buying and selling of leverage tokens.
How it works
leveraged tokens usually look like the large-cap coins but with extra suffixes, for example, BTCBEAR and BTCBULL. now how it really works is, {using BTCBEAR and BTCBULL as examples} you technically assess the BTC chart, if there is a prospective bullish trend on the btc chart, you buy the BTCBULL and watch {if your prediction was correct about the trend direction} as the money you invest into the trade move by 3x depending on the margin allowed by the exchange platform.
The same goes for a down trade, if you perceive a downtrend, you should purchase the BTCBEAR token as you gain from predicting the right trends that the original coin chart is heading towards, and buying the required token for the trend perceived.
Advantages:
- less risk:
Buying BULL/BEAR tokens automatically saves your account from liquidation, for example; when you buy the ETHBULL and the trade goes the opposite way, the leveraged token sells of some ETH to avoid liquidation automatically.
Disadvantages:
- Amplified volatility:
just like how the uptrends are magnified to give profit by 3x, so is the volatility of the base coin reflected accordingly on the leveraged token, causing high volatility in the token.
QUESTION 5: How to plan for trading in leveraged tokens
According to the lecture by @stream4u these are the adequate plans that should be made;
Investing small:
the professor advised in his lecture, that you invest about 30-40 percent of your total crypto wealth into your trades, that is, at every time, you should only risk 30-40 percent of your whole account, to promote healthy trading, and allow bounce backs even when trades are wrong.set profit target before entering:
he also advised that you should set or in my opinion, write down the profit target that will enable you to have a healthy aim for a certain time limit. Of course, that target should not be too high and obviously not too low either, following this plan would remove greed and revenge trading from the table when placing trades in the crypto market.Check crypto exchanges, fees, and interest rates if any:
also, it would be important to check out for fees and interests if any, in order to keep in mind how much you are going to be minusing from the total profit of every trade. imagining planning for what you would do with the profits, just for unplanned fees to reduce your earnings, that would be truly sad.Follow your plan!:
this is the most important plan of all, Discipline! I believe that disciplined trading is more profitable for a user with the type of plans listed above. Following your daily targets judiciously facilitates a very contempt trading behavior, so in order for you to not forget what you have formerly planned and agreed within yourself, i advice that you get a note and write down your listed plans.
QUESTION 6: crypto exchange platforms that offer the option of trading leveraged tokens and the margins they provide
crypto exchange platforms that offer leveraged token trading | margin provided by platform |
---|---|
BINANCE | 1.25x-4x |
BITTREX | 3x |
KUCOIN | 3x |
Price Forcast For Crypto Assets XXXXXX. (This is a similar question from the last course, take any Crypto Assets Chart graph, as per its current price and its market trend predict its future price for only next week, what will be its future price for next 1 week. You can predict for any direction up or down but explain it properly on what basis you have predicted the price. What will be the possible low level and high level for next week.).
Answer:
let me start by defining the different markings and lines with their respective prices to enable an effective explanation.
- R : this is the price i regarded as the resistance price/ point. at the time of my analysis was 0.16406 dollars
- S: This is the price i marked and regarded as the support line/ price where i suspect price would hit this week, and at the time of my analysis, the price was about 0.13375 dollars.
- S2: this is a lower support line that i have marked out from the previous price behavior. the price at this line at the time of my analysis was 0.1 dollars.
My analysis for Tron in the next one week
my analysis is; according to the black arrow on the image above, i highly suspect a retracement to the S point [$0.13375} during this new week. this is what i have predicted using the Fibonacci retracement technique. this screenshot above is based on a timing of 1 day, so this is exactly like me predicting the next 7 bars that the tron chart would pull up. This is my main analysis for the TRON coin in the next week.
but as you have seen above, you also saw that i put up two pink arrows, because it could also be suspected according to my Fibonacci chart that the Tron price could do a very evasive bull run and actually pass the R line ($0.16406), breaking it's former resistance level and surpassing it.
The predicted high for next week:
My predicted high for Tron next week is $0.165 this is because i have explained before, Tron could pump up and break its former resistance to reach that price.
Predicted low price for next week:
My predicted low price forTron next week is $0.10. I put this as a predicted low because Tron could also go down to the s2 point which is $0.1 to retest it within the week.
CONCLUSION
This lecture has opened me up to other types of trading, and I've really learned a lot from partaking in it. I hope to trade with leveraged tokens in the future because it really sounds nice. thank you @stream4u for the lecture, I hope you like my entry, see you next time!. All pictures were designed by me with the help of the canva platform and one screenshot from Binance edited by me.
Thank you for joining The Steemit Crypto Academy Courses and participated in the Homework Task.
thank you very much for taking interest in this class
Grade : 8
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Thank you for the review sir!
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