Cryptocurrency trading is becoming a popular way of making money online. Since crypto prices are unstable and incredibly volatile, it opens space for profit-making on upward and even downward market trends. For that purpose, crypto exchanges offer a variety of tools. For example, futures trading allows speculating on the future market direction and profit on up and down trends. Other trading tools available on crypto exchanges include margin trading, leverage, staking, spot markets, etc. All these methods allow to buy and sell cryptocurrency, multiplying your initial portfolio.
In this article, let’s take a closer look at how margin trading cryptocurrency works.
What is Margin Trading?
Some large crypto platforms allow for margin trading cryptocurrency. Here is the list of best of them:
Margin trading means a trader takes a loan from a platform to use it as leverage to their initial amount. That is, you invest a small sum but place a bigger order while borrowing additional funds from an exchange. Other platform users give their funds as a loan. Another option is a platform’s reserve fund.
If the cryptocurrency rate increases, your profit multiplies, but if it falls, you have huge losses. The bigger the leverage you use, the bigger the risk in the case the market moves in another direction than you supposed. So it is recommended to use the smallest possible leverage first.
Every crypto platform allowing for margin trading offers different conditions for using leverage. So it is crucial to read the rules before taking a load from a platform.
Check out the WhiteBIT exchange. It suggests a variety of tools for crypto trading, including margin trading cryptocurrency options and leverages of different sizes. You can also practice trading with borrowed funds on the WhiteBIT demo account. It will help you better understand how this method works.