Cryptocurrency trading is one of the ways to earn money from it. Introducing Margin Trading allows a trader to do leverage trade. Trading is something by which you are allowed to place your bids on some asset, hence predicting the market, if it goes as per prediction you win else you lose. Trading is a high risk — high reward game. You are a good trader only if you know how to trade competently. In cryptocurrency, trading is something which keeps the crypto alive. The fundamental principles of Demand and supply are what makes trading a prime domain.
The key to learning progressively in trading as a beginner is to not trade with high risk. You should place some small bids in the beginning and observe the market. There is a lot you can learn from looking at those charts only.
Talking about “margin trading“ is something related to more power with fewer assets. Let me put this way, “Traders with limited money and having good skills in trading are still allowed to trade by using Margin Trade.”
Here is a small example: You can go out and trade Bitcoin and Altcoin taking someone else’s money! Sounds right? well, it sounds dangerous; what if you lose that person’s mone… what will you give them back? Well now, let’s assume you made a good profit with that person’s money… you made 3x of the initial investment. Now you can give him back his money and take home the 2x money with you… Hence, Margin trade comes with high risk but also high reward.
What is Margin Trading?
Margin allows a trader to open a trade position with leverage. The leverage is like something which zooms the profit/loss. Example, you open a trade with 5x leverage (1:5), now if the charts of the investment increased by 10% that will mean a total of 50%. A standard trade, on the other hand is 1:1.
Exchanges allow giving loans to the investors due to the high transaction rewards to the exchange and lending market. Lenders give loan to the traders so they can use their trading skills and get a large amount back. Some Exchanges like Poloniex allows anyone to lend their coins for the margin traders.
Long Vs Short in Margin Trading
One of the best thing about margin trading that it allows you to make a good profit even if the market goes bearish (that is market goes down). Since you are allowed to trade from huge volumes you are allowed to place long and short position.
If you are the one who is good at predicting market then this might have a good opportunity. You can earn in both in a bullish and bearish market.
A “Long” position is when you predict that that coin will raise from its initial stage. A “Short” position is the opposite. A “short” position is when you predict that the coin’s price will go down from the initial point. Short in easy words means selling the money that you don’t own, vice versa for long.
Risk in Margin Trading
Great money comes with great risk, margin trade is one of the highest risk game in the trading. You can lose a massive amount of money if your predictions are wrong. Hence, one with good Techincal Analysis skill can make and a pridict market for good profits.
Advantage in Margin Trading
One of the major advantage of Margin is it allows a trader to get maximum profit in a shorter time. Trader gain a lot of experience from both good and bad trade hence can improve next time trading.
Margin Trading allows a trader to long and short any listed coin without owning them actually.
How to place your first order?
If you are really the beginner and want to try your hands on margin trading then you must try Bitmex Testnet Platform. Bitmex Test Platform is the test platform just like any other exchange, the difference is you never lose money. You can test your skill with fake test bitcoin.
I am showing this demo with Bitmex Testnet you should try it before jumping to actual trading.
- Step 1: Make an account in Margin Trading account.
- Step 2: deposit your bitcoins/ Alts to the exchange.
- Step 3: Open Margin Trading Section
- Step 4: Predict the market to go up or down. Hence plan the strategy to go Long or Short.
- Step 5: Enter amount you want to place the order of and Place your Market Bid in with Leverage. Here is the example of BTC long Order.
- Step 6: Once the order has been filled your margin position will be open like this shown below.
Once your prediction goes as per the plan you can see your Unrealised PNL goes green means you are in profit.
- Step 7: Now you can close the position by clicking “Close” to limit close or “Market” to Market close, and it will close your order with profit in your hands.
Tips For Margin Traders
- Never do margin trading if you are new to trading.
- Only Margin Trade if you are very certain about the market movement.
- Risk takers are allowed to use Margin Trading; you are the one who thinks that trading is game or you have some extra funds you can always try your luck in Margin Trade.
- Make a strategy and follow it.
- Learn to do Technical Analysis before trading margin.
Some good Margin Trading Platforms
You can always try your luck in Bitmex Testnet as a beginner. Else, here is the list of some top Margin Trading Platforms.
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