One of the greatest ways to make money is by trading cryptocurrencies. There is n number of crypto trading platforms that are usually available to assist the users with trading. It can be highly profitable depending on your trading methods. Lets see how Bitcoin Leverage Trading is been processed and implemented effectively.
Traders who have limited resources of cryptocurrencies can make use of a feature called “Margin Trading”. This feature increases the amount invested without having to hold the assets. This blog is intended for both the traders and entrepreneurs to come up with a clear perception of our crypto leverage exchange with its high-end features.
Margin Trading in Crypto Leverage Exchanges: Understanding the basics
Margin Trading is proven to be one of the dominant trends among cryptocurrency exchanges. This feature allows a trader to open a position with leverage. This means that the trader can borrow an additional amount of money from someone on the basis of money they already have.
Let me explain you with an example. If you make an investment of $2000 in BTC but you only have $1000. So, to bring an addition of $1000, you borrow them with a margin of 2:1. This means that for every dollar you invest, you will get an additional dollar to invest.
If in case the BTC price increases by 50%, your investment of $2000 is multiplied to $3000. You can liquidate and pay back $1000 to the lender and enjoy your additional profits. On the other hand, if the Bitcoin price decreased by 50%, your investment of $2000 is reduced to $1000. In this case, the lender needs to be protected and he/she has the complete rights to claim them. Now your initial investment of $1000 is lost. This can be rewarding as well as very risky depending on the volatility in the crypto market.
So, Who will be lending these additional funds?
You may be confused with who will be responsible for providing these funds. Usually, individuals and brokers act as lenders here. They lend their money or BTC to the traders on a fee or interest rate.
If in case, the trader’s portfolio is poor, the lent broker has the complete advantage of closing their position for refunding and save the lenders such that they get their interests and money paid first. On the flip side, if the margin trader’s portfolio is performing well, the brokers would be happy to lend additional funds in the future as well!
If you look at the popular Margin Trading Exchanges, margin trading is possible with the existing market. In the case of Poloniex, one such Crypto Margin Exchange, users provide the loans for the margin market, while in other exchanges, they provide themselves.
Cost & Tips of Margin Trading in Bitcoin Leverage Exchanges:
The cost of Margin trading includes paying the interest fee for the borrowed funds. In addition to this, traders will be charged for opening a position with the margin trading exchange.
It is now possible to margin trade as most of the crypto exchanges have brought this feature. The advantages of leveraged trading are very clear, with a great benefit of security. Crypto traders should try to minimize the number of cryptocurrencies they hold on the exchanges. Since they are currently prevalent hacking happening in the crypto industry.
Trading on margin allows us to open leveraged positions with no need of providing the Bitcoin. In this way, one can hold fewer coins in the exchange.
If you are an active Margin trader, here are a few tips which you can take into account:
- Managing Risks
When trading on crypto exchanges, it is crucial to be aware of the risks involved. Make sure you have a backup of money if in case, you have lost your funds.
- Watch closely
As we already know, cryptocurrencies are considered to be the elements of high volatility. Therefore, try to make short-term leveraged trading for your business.
- Have an eye on major events & decisions
The volatility in the cryptocurrency market is hugely caused by the major decisions and events of the popular ones. Therefore, know about them in advance before you start to buy or sell the cryptocurrencies.
Have all these tips in your mind, before you get started with Margin Trading. It would be profitable if you are an experienced trader.
Zab Technologies Crypto Leverage Exchange:
Zab Technologies, the top-notch Blockchain development company, understands the importance of the Margin Trading feature. Thus, we the people have blended them well into the crypto exchange software. As most of the traders are looking for this high-end feature in the Bitcoin exchanges, we made this turn into reality.
You can buy our cryptocurrency exchange software from us to instantly build your own trading platform in a hassle-free manner.
In addition to Margin Trading feature, we have lot more included in the list such as:
- Order Books
- Liquidity API
- Initial Exchange Offering Module
- Security Token Exchange
- Mobile Application support for Android & iOS devices
- Trading Bot
- Cryptocurrency Wallet development & integration
And much more!
All these functionalities are tailor-made. Hence, they can be completely customized as per your unique requirements in the industry.
Why not to contact us for a chargeless consultation? We are happy to answer your queries!
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