INTRODUCTION
What Is Crypto Margin Trading?
Before I state what crypto margin trading is, let me first of all state the meaning of margin.
Margin in its simplest definition as it relates to crypto is a borrowed crypto asset for which collateral is paid.
Therefore;
Crypto Margin trading is a type of trading that allows the borrowing of funds from another person usually called a trader by an investor in a crypto market. Since margin trading involves borrowing, an amount of the investor's crypto asset which will serve as a collateral will first be paid to the blender for security reasons.
In crypto margin trading, an investor who do not have funds in his margin wallet can trade any amount but he has has to pay interest for the money borrowed.
As the borrowed crypto is for a period of time, if the investor losses in the trade and wants to extend the period of the borrowed money, he has to pay another interest for the period the of the new margin. This way, the investor has answered the margin call from the the lender.
There are two major types of Crypto Margin Trading. Isolated Margin Trading and Cross Margin Trading.
How it Works.
Cryptocurrency market trading is highly profitable when the market goes in favour of an investor but huge amount of losses can also be incurred if the market conditions are not favourable.
Daniel has $200 in his margin trading account but wants to buy an asset in XRP worth of $400. He bought bought with his $200 and borrows another $200 to buy the same coin. If the market goes in favour of his trade and XRP rises by 50%, he gets 100% gain. This means that Daniel makes 100% gain in the trade. A reverse of this will also happen if XRP market falls by 50%.
How To Plan For Trading In Crypto Margin Trading.
As margin trading in crypto is highly risky people have to have proper plan before going into it as no one wants to make trades in crypto with an intent to loose part or all of their funds.
Before dabbling into crypto margin trading, the following steps or guides should be taken to avoid the pitfalls in it.
Acquire enough knowledge about cryptocurrency in general.
People who come into crypto margin trading because they meet a friend who is making it in it may loose their lifetime savings if they do not have a proper and quality knowledge about crypto generally. A general knowledge about crypto will serve the basis for which margin trading knowledge will be layed.Acquire a specialized knowledge on crypto margin trading. A special knowledge of what margin trading is and how it is done is needed to be successful trader in it. Anyone who is interested in this kind of trade should plan to learn it very well in order to attain success
Plan to start small and increase little by little.
Predicting the prices or values of cryptocurrencies is not easy, therefore it is advisable one starts with a little amount of Crypto asset until one gains personal experience.Have an aim and a target
For every trade you make on margin trade, it is important you have a target or an aim that you should follow in order not to miss out on opportunities. You should have a goal on when to buy and when to sell. And when the profit level is reasonable enough for you, it's advisable you stop trading and wait for another better time.Check fees and interest of exchange you plan to use.
There are different exchanges that offers margin trading for cryptocurrencies. Individuals who plan to margin trade should check for the exchange which offers less trading fees and interest rate.
Crypto Exchanges Name That Provide Margin Trading Service and What Margin They Provide?
Many cryptocurrency exchanges offer crypto margin trading services with different interest and margin.
Some of these exchanges and the margin they offer are listed below.
Exchange | Margin | Fees |
---|---|---|
Binance | 1-125X | 0.1% |
Bybit | 100X | 0.075% |
BitMex | 100X | 0.075 |
Huobi | 3X | 0.2% |
Poloniex | 5X | 0.2% |
Deribit | 100X | 0.5% |
Kraken | 5X | 0.02% |
What Is Leveraged Tokens Trading?
Leverage Tokens are tradable assets on exchanges whose price movements are dependent on the major cryptocurrency on which they are named.
Though leverage tokens traded on the spot trading zone like every other cryptocurrency, they are designed for short term bets in price upward movement, therefore they cannot be held for long. Every exchange have a certain period for which they allow holding of these tokens. For example in Binance exchange, leverage tokens are only allowed to be held for 7days. Once you hold Binance leverage more than 7days, the system will continue to send you messages in the form of notification every two or three days until they are sold
Leverage tokens uses their cryptocurrency as leverage as their price movement is in consonance with the main cryptocurrency. That is when the price of the cryptocurrency goes up, the UP of the leverage goes up while the down goes down. While when the cryptocurrency goes does, the UP goes down while the down goes up.
Leverage tokens are only paired with USDT stable coin and cannot be withdrawn or transferred to another wallet. Examples of leverage tokens on Binance exchange are XRPUP/USDT, XRPDOWN/USDT, BTCUP/USDT, BTCDOWN/USDT, TRXUP/UDST, TRXDOWN/USDT, etc.
While on FTX and Bittrexwe have USD-ETHBULL, USDT-ADABEAR, USD-ADABULL, etc.
How To Plan For Trading In Leveraged Tokens?
One need to have a good mapped out plan to trade leverage tokens. Though they are highly profitable, they can result to big loss. They cannot be traded every day like cryptocurrencies, therefore a plan is necessary to make the profit needed.
Note the following while planning to trade leverage token on any coin.
- Proper knowledge on the cryptocurrency for which the leverage token is based should be known.
- Only buy the UP of a leverage token when there is a bearish market or a drastic fall in the value of the major coin.
- Only buy the down of a leverage token when the price of the cryptocurrency or the UP of the same leverage is highly volatile.
Crypto Exchanges Name That Provide Leveraged Tokens Service and What Margin They Provide In Leveraged Tokens?
Exchange | Margin |
---|---|
Binance | 1. 25X and 4X |
FTX | 3X |
Bittrex | 3X |
Huobi | 3X-10X |
Poloniex | 3X |
Price Forecast For Crypto Assets XXXX. (This is similar question from 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.).
BNBUP/USDT CHART.
From the above chart, what I can predict about the price of BNBUP leverage token is that by this time next week, it will hit $3000.
This is on the basics that the Bollinger band indicator the price will go up very high. Since it has reached $2300+ today, with the volatility that BTC is going to attain next week, the BNB coin will rise very high because the movement of BNB coin is greatly influenced by BTC movements and if this happens, BNBUP will hit $3000 and possibly surpass it.
The possible high and low would be $3112 and $2855rl respectively.
This is my homework task.
Special Mentions:
@steemitblog
@SteemitCryptoAcademy
@stream4u
Hi @tmighty
You used an image from COINCODECAP.COM which looks copyright. To avoid confusion for copyright images I was informed in a course post not to use any images which had a watermark, website names on them that refers to the other forum sites.
Cc: @yousafharoonkhan
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Hi Prof @stream4u
Which of the images pls because I sited all of my images except the one I design with canva.
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Sorry for the typo error, I have edited the comment, maybe it will help you now to find that image.
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Alright sir...
Let me check.
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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 : 6
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Hello @yousafharoonkhan. Thanks for your remarks. I am so grateful to you.
I look forward to yours next week.
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