Bitcoin margin trading is one of the most popular ways for digital asset traders to bet on the price of bitcoin. However, it is also one of the easiest ways to lose money trading bitcoin.
In this guide, you will learn what bitcoin margin trading is, how it works, and what platforms you can use to trade bitcoin using leverage.
What is Bitcoin Margin Trading?
Margin trading refers to using funds borrowing from a broker to increase the size of a trading position to potentially increase profits on the trade. Bitcoin margin trading follows the exact same process as traditional margin trading.
Bitcoin traders can borrow funds to increase their buying power. The borrowed funds mean interest payments, but many users find it worth the cost due to the potential gains with 4:1, 10:1, or even 100:1 possible leverage.
If an investor puts down $50 on a 10:1 leverage ratio, they will have buying power equal to $500 with $450 of it consisting of borrowed funds. Exchanges can forcibly “call” in their loans if the investment gets close to losing the borrowed money.
Traders with the confidence to trade on margin can find a number of exchanges that offer the lending service. But users must meet certain criteria or at least verify capital requirements on most platforms.
For example, GDAX only allows accredited investors to utilize the margin trading feature. It’s a rule set by the platform to ensure their users will have enough capital to cover the borrowed funds if the investment were to walk off a cliff.
Traders can leverage short or long term, and many choose to do both in order to hedge their bets. It’s important to keep in mind that all borrowed funds must be paid back with interest, so only borrow what you’re willing to cover in the event of a total loss.
Pros and Cons of Bitcoin Margin Trading
Bitcoin margin trading combines one of the riskiest trading techniques with one of the riskiest assets on the market. It has incredible upside potential coupled with monumental risk.
The benefits and drawbacks of bitcoin margin trading are as follows:
- Boost in purchasing power: The lending aspect of margin trading allows investors to purchase beyond their account, giving them the ability to buy more of an asset via borrowed funds
- Investment options, i.e short-selling, hedging with long and short term: Margin trading provides more flexibility when choosing an investment strategy
- Exponential growth potential: Traders with minimal capital can increase profit potential
- Stress of using borrowed money to make investments: Investing is stressful enough, adding loans, interest rates, and more risk only increases investor anxiety. Not every investor can sleep easy knowing that borrowed money is at risk.
- Interest payments on loaned funds: Interest can accrue quickly on margin loans, and rates tend to be higher for digital asset investments.
- More risk via increased loss potential: Investment risk factor increases by an order of magnitude, so investments must be chosen with extreme caution.
- Margin calls: When your margin position moves against you and you don’t have enough funds on your margin account to cover the loss, you will receive a margin call to top up your funds. If you call to act, your position will be closed out by the exchange.
Types of Bitcoin Leveraged Trading Products
Digital asset exchanges offer various levels of leverage. For example, BitMEX allows investors to leverage up to 100:1 on some contracts, but the acceptable leverage will ultimately be determined by the initial margin (amount of equity required to open a position) and the maintenance margin (minimum equity to keep the position open).
Although margin trading should be left to experienced professionals, learning the basics of margin trading products is relatively easy.
People who are unfamiliar with financial markets may not even realize they have the ability to bet against the market rather than having to solely focus on whether or not the bulls will go for a run. Margin short selling digital assets is a straightforward concept; investors can increase their buying power with borrowed funds in order to make their bet against the market much heavier. If the value of the digital asset decreases, the investors make money. In contrast, an increase in value would decimate the margin contract.
SHORT SELL EXAMPLE: Investor uses 10x leverage to sell 1 BTC at $10,000, initial margin is only $1,000.
|Percentage Change||Price||Profit/Loss in USD||Profit/Loss %|
The majority of investors will likely feel more comfortable going long or betting. Long margin trading comes with significant risk, but the payoffs can be exponential. As seen in the chart below, the potential gains are astonishing when you combine leverage with the volatility of digital assets.
LONG BUY EXAMPLE: Investor uses 10x leverage to buy 1 BTC at $10,000, initial margin is only $1,000.
|Percentage Change||Price||Profit/Loss in USD||Profit/Loss %|
What are the Best Margin Trading Platforms?
|Exchange||Description||Taker Fee||No. of coins available for margin trading||Leverage Available||Trustpilot Rating||Twitter Followers||Score|
|FTX||FTX, a leveraged cryptocurrency exchange built by the Almeda Research Group, offers advanced derivatives trading among other products such as volatility indeces and leveraged tokens. FTX launched in 2019 with a focus on building a platform designed for the modern trader. The Antigua-based exchange specializes in leveraged products and currently offers its services globally except for those investors residing in United States, and a handul of other countries.||0.07%||13||up to 20x||4||15,000||4|
|Binance||Binance is one of the youngest cryptocurrency exchanges in the market as it was only launched in 2017. Nonetheless, it has managed to quickly establish itself as one of the leading exchanges. Binance supports over 100 digital assets and provides an intuitive trading platform that even beginners will find easy-to-use once they get the hang of it. The Malta-based exchange now has over eight million users across the globe.||0.02%||6||up to 5x||3||1,100,000||3.8|
|Prime XBT||Prime XBT is a bitcoin-based platform, offering leveraged trading on several digital assets including bitcoin, Ethereum, Litecoin, and Ripple. PrimeXBT offers a robust trading system for both beginners and professional traders that demand highly reliable market data and performance. The entire infrastructure is designed to facilitate high number of orders per second and extreme loads, while offering ultra-fast order execution and low latency.||0.05%||5||up to 100x||4||24,700||3.8|
|Kraken||Founded in 2011, Kraken was the first bitcoin exchange to have its market data displayed on the Bloomberg Terminal, the first to pass a cryptographically verifiable proof-of-reserves audit, and one of the
first exchanges to offer leveraged bitcoin margin trading. Kraken is trusted by millions of traders, institutions, and authorities across the world, from Toyko’s court-appointed trustee to Germany’s BaFin regulated Fidor Bank. In 2019 Kraken acquired Crypto Facilities, a registered futures platform.
|0.02%||6||up to 5x||2||392,900||3.7|
|BitMEX||BitMEX is a P2P crypto-coin trading platform that gives retail investors access to the global markets using cryptocurrencies. As one of the fastest-growing companies in the cryptocurrency and fintech space, it provides a unique, trading-focused experience to digital currency markets. BitMEX is the world’s largest bitcoin/USD trading platform by volume, though US residents cannot use the service, per the site’s terms of service.||0.08%||6||up to 200x||3||19||3.6|
|Huobi Pro||Established in 2013, Huobi has become one of the world’s largest digital asset exchanges. Having once accounted for half of the world’s digital asset transactions, Huobi now serves more than 5 million users in over 130 countries around the world.||0.20%||11||up to 5x||3||163,600||3.3|
|Poloniex||Poloniex is a leading digital asset exchange and was one of the first altcoin-focused trading platforms in the market.||0.20%||11||up to 2.5x||2||249,200||3|
|Coinbase Pro||Formerly known as “GDAX”, Coinbase Pro was launched in 2015 as an extension of Coinbase. The professional trading platofrm enables high volume digital asset investing along with other advanced features, like margin trading, not included on the orginal Coinbase exchange. Among those offered are additional security measures, increased liquidity, lower fees, and more. Coinbase Pro also features a more complex user interface that converys far more information per page than its rudimentary counterpart.||.04-.5%||8||up to 3x||3||194,500||2.6|
Bitcoin margin trading is one of the riskiest digital asset investment approaches. So it’s best to leave this particular technique to the professionals or those willing to lose massive sums of money.
Having said that, exchanges that offer up to 3x leverage present a unique opportunity for investors with little capital. Although interest rates and margin requirements limit investors, the profit potential for a well-researched and calculated 3x leverage trade is more than appealing, and the capital requirements won’t be astronomical.
Just remember, with great leverage comes great responsibility.
Subscribe to Bitcoin Market Journal to stay up-to-date with the latest developments in the digital asset markets.
TRAMS DEX Propels Global Adoption of DeFi with Automated Market Maker (AMM) protocol
TRAMS DEX Propels Global Adoption of Defi with Automated Market Maker (AMM) protocol, as Industry Leader VIP Guests, Global Participants, and Management Team concludes Webinar Session Marking a Successful First-Phase Launch.
VIP Speakers Unanimously Acknowledge Perfect Market Timing of TRAMS DEX in Decentralized Finance Industry, High Industry Growth Factors, Following 2 Hour-Long Launch Session.
The TRAMS DEX founder and senior management team today concluded a high-impact webinar session as an official launch of its Automated Liquidity Provider protocol, the first of three phases for TRAMS’ Decentralized Finance Business. Industry leader VIP guests and participating members pledge support for open finance and Defi for creating more access to financial products at much lower costs to anyone on demand.
The launch took place in District Singapore, Republic Plaza 9 Raffles Place with a Zoom Webinar hosting a global Defi community and TRAMS DEX protocol members/users community. The discerning VIP panels and participants from ranging continents stencil the much-needed change in the financial sector especially in traditional banking plagued with corruption and scandals where only a small closed and selected groups are the main beneficiaries.
The webinar introduces the protocol with its open finance principles and guides participants into the operations with these key points: TRAMS DEX is one of three key operations from the TRAMS ecosystem with the main operating principle of Decentralized Finance (Defi). TRAMS DEX is an Automated Liquidity Provider that enables better and faster user interactions with digital assets. With the innovation of the Automated Market Maker (AMM) solution, traders can easily exchange digital assets at any time with guaranteed market supplies from the liquidity pool without giving up the custody of their digital assets. As a decentralized exchange, TRAMS DEX is able to create open access opportunities for participation without discrimination and any controlling institution barrier.
At TRAMS.io, anyone with an Internet connection and a Web 3.0 wallet can gain access to liquidity where otherwise would be ineligible through traditional finance or banking. TRAMS DEX operates a Decentralized Exchange that offers three (3) impactful functions with a minimal user interface designed for clear navigation.
The first function, global liquidity access or buyable, sellable, or tradable market access. Users of the protocol can easily gain access to “constant” liquidity with a simple crypto assets swap function at a minimal cost of 0.3% transaction fee. Direct wallet connections are automated as well with a few simple clicks. All transactions are secured with blockchain encryptions and conducted on-chain with transaction data records automatically recorded for open access viewing on Ether can in real-time.
The second function, make money from idle assets. TRAMS DEX creates a money-making model for liquidity providers (LPs) on the platform. By supplying idle crypto assets to any pools listed on the protocol, the LP earns a profit share generated from the swapping fees on TRAMS DEX. The liquidity provider profit sharing is proportional to contribution. Profits are calculated at least once every twenty-four hours (24 hrs). True to open finance principles and Defi, participating LPs can withdraw their contribution at any time without any fee or penalty.
Thirdly, earn a high passive income. The TRAMS DEX incentive model lets participants earn high passive income in the form of yields, calculated in APY% (annual percentage yield), simply by staking (or depositing) its native token (TRAMS) on the platform. This encourages participants to remain active on the platform and better maintains constant liquidity reserve. This translates to double benefits for participating LPs, more profits are added on-top of the profit-sharing earning from staking LP tokens on TRAMS DEX.
TRAMS DEX is accessible constantly 24/7 to anyone globally. All associated costs of operations are kept very low and precise by utilizing automated smart contracts and AMM trading algorithms for trade executions and operations. Compared to traditional financial institutions and banks, TRAMS DEX provides better, cheaper, more accurate services.
Bryan Feinberg of Plato Data Intelligence, the Founder/CEO of Etheralabs, commented from New York City via Zoom video call with the support of blockchain as the fundamental architecture of TRAMS DEX and Defi space which offers high data security and transaction transparency for users. As a member of the Blockchain Venture Advisory, he believes Decentralized Finance such as TRAMS DEX has a high adoption rate and direct use case for blockchain applications.
Mamadou Toure, Forbes 10 Most Influential person in Africa and President/CEO of Ubuntu Capital Group, tributes TRAMS DEX for providing access channel to liquidity where traditional banking and capital access are limited to non-existent. He further acknowledged the opportunities TRAMS DEX would create for users world-wide to easily finance business initiatives.
Victor Kong, CEO of VK Capital Digital Funds Pte Ltd endorses William Tien, TRAMS DEX’ Founder/CEO, for his vision and ambition in creating a Decentralized Ecosystem starting with TRAMS DEX following by TRAMS Finance and TRAMS Assets, for phase 2 & 3, respectively, as an alternative to private equity funds for real estates and infrastructure projects with a portfolio size of 1-10 million USD. TRAMS DEX removes the high barrier to entry by drastically reducing mandatory due diligence costs of raising capital, which remains the same as a 50 million USD project. He also credits the intention of listing the ecosystem, TRAMS DEX included, on the London Stock Exchange via reverse IPO within 3-6 months.
Self-Sovereign Decentralized Digital Identity
Time & Date: Wednesday, Nov 4th, 2020
8:30 AM Eastern Standard Time
Speakers: Marco Aniballi (BlockBlox)
Luke Stokes (FIO, EosDAC)
Alex Puig (Caelum Labs)
Gordon Einstein (CryptoLaw Partners)
Sander de Bruijn (Crypto Entrepreneur)
Zoom Info: https://zoom.us/j/89200977541
Kucoin and Revain Announce Partnership
Before deciding to buy or apply for any service, consumers are primarily interested in doing their homework via the ability review via 3rd Party Objectivity based on what other people are thinking.
In order not to get lost in multiple offers of wallets, exchanges, and cryptocurrencies, Internet users are starting to look for reviews to guide their decision-making process.
The revain.org project began to use blockchain to keep all reviews unchanged. This gives trust to the community and allows users to learn with the ability to interact with both projects that interest them and the communities they represent.
Trust can play an extremely important role for serious companies. The KuCoin and Revain projects have started cooperation for the common benefit of both communities. The Revain Widget implemented on the main page of one of the leading exchanges allows visitors to read and write reviews directly on the platform.
Companies that have already achieved success should understand that the review widget increases a conversion rate and provides additional traffic.
And there are other pluses as well
For example, why would you buy products on a mystery shopping service if you can simply read a ready-made review on the Revain website?
And it will be fair, fast and, most importantly, it’s free.
It’s not a surprise when blockchain technologies are used in the crypto community. But the Revain Project doesn’t intend to stop there and has serious plans to expand the topic on which the writers will write reviews.
It’s important for people that the review includes pros and cons.
This could stem from concerns about fake reviews, and an underlying assumption that balanced reviews feel more authentic than reviews that are overly or exclusively positive.
Consumers want retailers to have better technology, offer more services, and establish better personal connections. Consumers think about what good shopping experience looks like in the first place. Therefore, when people read or write a review, they pay attention not only to the facts but also to the feelings that appeared after the purchase from the company to which the review was then written.
When there are feelings, it is important to preserve a zone of trust and comfort
The usual advertising channels carry information about the product and the brand. But they do not contain the emotions of other buyers. The buyer chooses where he will share his buying experience.
And it is especially important that the credibility of the review that is written on the seller’s website does not reach heaven. It is very important to have an independent platform, the need for which has been ripening for a long time in the Internet community.
Therefore, reviews are written on the Revainplatform. You can display these reviews on your website using a simple widget. Thus, customers will see the independence of the review and at the same time, they can read it without leaving your site.
Of course, there were sites for reviews, they exist now and will continue to appear. But a project like Revain meets the expectations of ordinary people and businesses as much as possible. After all, reviews cannot be deleted or falsified because of blockchain. The hash of each review is kept for centuries.
Because of this, some reviews may seem funny as their authors decided to add some new facts or correct mistakes later. I recommend visiting and reading such reviews. A very interesting experience.
Source: Rinat Arslanov has been the Co-Founder and CEO of Revain since its inception. He describes his passion for Revain as a life project for him. He is currently doing his Ph.D. at Plekhanov Russian University of Economics and is expected to complete his doctorate in 2022.
TRAMS DEX Propels Global Adoption of DeFi with Automated Market Maker (AMM) protocol
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