Four Facts of Crypto Margin Trading

Crypto Margin trading is rewarding as well as risky, while the investor needs to be smart and familiar with the basics he also needs to be aware of basic facts about crypto margin trading. Sample this –

You are an investor putting money worth $10,000 in cryptos and couple of days later the same $10,000 is valued at $20,000, and a few days later the investment is just $200. It’s insane! Isn’t?

Hence, it gets crucial for investors to know the basic facts of crypto margin trading. Let’s get started –

Facts of Crypto Margin Trading

Experience Pays

You could be next Vitalik Buterin, but margin trading needs only veterans. The investor should know the rules of the game. The world of cryptocurrency and on top of it applying margin trading strategy is a risky approach, and hence best suited for experts. Reading a book or a Reddit comment that says how I made $10,000 via crypto margin trading could be fabricated stories with no supported base. Hence before making any investments gain experience, get trained, acquire skills and then jump onto the arena.

Start Slow

Being a pro does not entitle you to opt for higher levels of leverage. With crypto margin trading, the mantra is – BE A TURTLE. Effective risk strategy is essential but starting slow is also much more crucial. Start by using a lower level of leverage and do not put a massive investment from day one, estimate your loss in case the market isn’t expected as you speculated.

IF you are trading too much in the crypto world that is a highly volatile market, it can even lead investors losing 200-300 BTC in a few days.

Risk Management is critical

Starting slow is one of the active risk management strategies and so is the option of using a stop loss. It boils down to “How much you can lose”? So if you bought bitcoin at $10,000, you could set a stop loss order at $8,500. It would help in limiting your loss to $2,500.Be very cautious while using stop-loss as a risk management tool, because if you set a price too close to buying price, you may lose and put a stop occur before any profit is seen. Or if you select a broader range that could also result in substantial losses. Read more here at Five Crypto Margin Trading Tips Investor Should Know

 

Cushioning is prime

Last but not the least is never ever put all your money on a single trade, even though you are 200%sure of returns. Make sure to keep some spare cash for unforeseen circumstances and when the market is not on your side.

Do you have any fact to share about Crypto Marin Trading? Feel free to post on our twitter page here.

 

References

Finder, Coinsutra, cryptopotato

 

Shipping MCO visa cards – crypto.com

Crypto.com previously known as Monaco, the payment and cryptocurrency platform announced that they have initated shipping of MCO Visa cards to its users in Singapore. The MCO Visa cards are a range of prepaid cards that gets easily linked to the mobile crypto wallet app. Talking about the features, the firm stated- a metal design with no annual or monthly fees. There are also free ATM withdrawals, tap-and-pay functionality and even airport lounge access for certain card types.

Read more at sludgefeed.

dYdX raised $10 Million to help you short Ethereum

A crypto startup dYdX raised $10 million from investors to design and develop a sowaftre that assist individuals to borrow money from each other without a broker. The firm has developed a margin trading protocol that is based on the computing network Ethereum. The prime motive is to provide a platform to individuals to create new cryptocurrency-related financial products, like interest-generating loans, short sells, or leveraged long positions.

The team is set to launch more assets that includes a long leveraged Ethereum token, that is designed to amplify the gains/losses of traders trading on margin. The team is also planning to add newer assets in future depending on their liquidity such as native coin of 0x or the ZRX token.

Read more at fortune

Terms You Need To Know – Margin Trading, Margin Funding, Long and Short Position

We spoke a lot about Crypto Margin Trading, How it works, pros and cons, Ethereum Margin trade, bitcoin margin trade, and even margin trading tips but there are some of the terms which are yet to be explored. Our post of today would narrate some of the terms like – Margin Trading, Margin Funding and What it means to have a long position and short position in a Margin trade.

Let’s get started –

Margin Funding and Margin Trading – What’s the difference?

 

What is Margin Trading?

Margin Trade or Margin Trading is a process of borrowing funds from brokers/exchanges that could be used to buy cryptos of a large amount. So for example –

If you are planning to buy $10,000 worth of Bitcoin

With borrowing 50% Or leveraging 2:1 or 2x

Then you would only need $5000 to purchase a bitcoin worth $10,000.

With the leverage, an investor is allowed to own a capital worth more of its buying capacity. There are many platforms that offer a leverage up to 100x, but please be cautious before investing as it’s a risky venture.

What is Margin Funding?

Margin Funding is precisely opposite of the margin trade, where the lender offers amount to a trader to fund an investment.

So continuing the same example –

If a trader is planning to buy $10,000 worth of Bitcoin. 2:1 or 2x leverage, the lender or funder could offer a loan of $5000 to the trader.

The trader would need to pay a margin funding interest fixed by the borrower/platform. Here the terms, i.e. return rate, duration, and the amount could be chosen by the lender or fixed by the exchange.

Margin Funding is considered to be a safe option for many investors, as the borrower pays for your losses.

Long Position and Short Position in Crypto Margin Trading?

In Margin Trading, investors need to apply their intelligence and analysis to predict strongly if the crypto price would move up or down.

So, if you are planning to make a profit with Bitcoin price moving up, you might need to consider opening a long position. Here is an example that demonstrates how a long position in crypto margin trading works –

How Long position in crypto margin trading works?

Say, as a trader you wish to procure Bitcoin worth of $600 and based on your prediction you have come to conclusion that Bitcoin price would move upwards.

So, with 1:2 leverage you borrow $300 and buy Bitcoin worth of $600 when price moves up say $900 the profit you earned would be $300 [ 900-300[account balance]-300[borrowed money]], i.e. excluding fees/interest.

This is known as a Long position in crypto margin trading.

Now, if you are planning to make a profit with Bitcoin price moving down, you might need to consider opening a short position. Here is an example that demonstrates how a short position in crypto margin trading works –

How Short position in crypto margin trading works?

The current price of Bitcoin is $400 and again as per your smart analysis you come to a conclusion that prices would be dipped further, then you can earn a profit by selling the borrowed cryptos and repurchasing them later at a lower price.

The exact opposite of a buy position and even the profit/loss is reversed.

So if you opened a 2x short position with $100, if it went down 50% you’d earn $100; if it went up 50%, you’d have lost $100, and the exchange would close your position.

Hope this narration helps you in understanding Margin Trading better. Happy Trading.

References

Bitfinex; Bitcoinkit; cex.io

Research – Most of Crypto Assets Are Highly Centralized

The beauty of Bitcoin and other cryptocurrencies lies in its decentralized nature, ensuring there is no single point of failure. However new research has found that the majority of the digital asset existing in cryptospehere are highly centralized. Cryptocompare, the cryptocurrency market data aggregator analyzed over 200 crypto assets and had published a Cryptoasset Taxonomy Report.

The report highlights that just 16% of crypto assets are genuinely decentralized, around 55% as centralized and the rest as semi-decentralized.

Read more at news.bitcoin.com

How and Where to Margin Trade Bitcoin?

The world is divided, while some support crypto Margin trading to be a blessing, few others are against it. In spite of the clash, speculators and investors are investing and making a fortune and others who are losing it. Which side are you at? Until you make up your mind, how about knowing How to Margin Trade Bitcoin? Exchanges that support Bitcoin Margin Trading?

Let’s get started –

How To Margin Trade Bitcoin?

Margin Trading – a process of borrowing money from an exchange/broker to fund a large amount of investment. While in our last post we described adopting to stop loss would be a good idea, make sure to follow other Crypto Margin Trading Tips as well.

The Margin Trading concept, when applied to Bitcoin, is known as Bitcoin Margin Trade. So for example –

The current price of Bitcoin is $600, and as an investor, you are expecting the price to grow.

To make a profit, you are willing to buy Bitcoin now and sell them later at a higher price.

Balance $300
Borrowed money $300
Leverage 1:2 leverage
Closing Position when the price hits $800 $300 of balance is returned.
Profit earned ~$200 [ $800 – $300 – $300] fees not included.

 

Exchanges to Margin Trade Bitcoin

BitMEX

BitMEX or Bitcoin Mercantile Exchange is a peer-to-peer trading platform that also offers leveraged contracts that are bought and sold in Bitcoin. At BitMEX you would find crypto derivative instruments being sold and bought on margin trade.

BitMEX, the only exchange in the market that could provide 100x leverage, i.e., for every BTC/XBT you own, you can trade as if you have 100 BTC/XBT. You can also trade Bitcoin Cash at 20x leverage. It’s worth noting that BitMEX only accepts BTC deposits and no other currency, even the profit and loss are in BTC.

To start off trading on BitMEX you can register here.  You just need your email to set up and could secure your wallet using two-factor authentication. Bitmex is very high risk or high reward ether leverage trading; please trade cautiously knowing the risks.

Cex.io

If you are looking to invest a large sum of money, CEX.io is a decent place to start with crypto margin trading. It offers Bitcoin, Ethereum and Bitcoin Cash margin trade with 3x leverage. Providing services across the globe, they accept Visa, Mastercard, bank transfer and cryptocurrency payments.

To start off, you can register here, and once the account is verified, you may start trading.

Kraken

Kraken, one of the largest Bitcoin and altcoin exchanges in the USA offers crypto margin trading with the advantage of different leverage options for different pairs. Check here different currency pairings that could be traded on margin using leveraged orders.

To start off, investors can register on their website using the email id, that follows with KYC verification. Usually, it takes up to 7-10 days to get the verification completed.

BlockFi Support Litecoin, GUSD For Crypto-backed Loans

BlockFi co-Founder Zac Prince said in a statement – We have added GUSD and LTC to be used as collateral for crypto-backed loans. This is the company’s first expansion of accepted collateral into top-10 cryptocurrencies. As per the press release – The newly added GUSD option will empower BlockFi to offer loans at any time, and not only during US bank hours. As BlockFi vice president of operations and co-founder, Flori Marquez said – Many parts of the world yet do not have easy access to low-cost credit. With BlockFi support to GUSD, we are looking forward to providing stability to citizens of regions with less stable currencies.

Read more at benzinga.

 

How and Where to Margin Trade Ethereum?

Crypto Margin Trading offers traders with access to borrow the capital and make a purchase of a larger volume of cryptos. In case of margin Trading Ether, the investor lends money/crypto to access Ether of larger volume. Our post of today will talk about how and where you can Margin Trade Ethereum. Let’s get started –

How to Margin Trade Ethereum?

Margin Trading Ethereum means to borrow capital from a lender or Exchange to purchase a larger volume of ether. The amount that is borrowed is the “initial margin” and predefined by the exchange and could vary with each platform. Many traders find margin trade as lucrative trade. However, even risks are considerable and hence practice cautiously.  To limit traders from borrowing too much, the margins are limited called as maintenance requirement.

Let’s pick an example –

Anthony wishes to margin trade on Ethereum.

So,

Amount Deposited as maintenance requirement $5000
Borrowed money $5000
Purchasing Ether worth of         $10000
Initial Margin set 25% i.e. value of the purchased Ether drops to $8,000, Anthony would need at least $2,000 (25% of $8,000) in equity
Total Equity with Anthony $3000 [$5000 -$2000]

With a price drop such that it results in total equity with Anthony less than $3000, margin call would be initiated. That means either Anthony needs to top up to maintain the maintenance requirement or the exchange would sell off his Ether to bring the account back up to the maintenance requirement.

 

Exchanges to Margin Trade Ethereum

Here are some of the exchanges that allow traders to Margin Trade on Ether.

Bitfinex

Bitfinex, founded in 2012 is a cryptocurrency trading platform that has its headquarters in Hong Kong and registered in the British Virgin Islands. The exchange facilitates spot trading for most of the digital assets like Bitcoin, Ethereum, EOS, Litecoin, Ripple, NEO, Monero and many more. They also offer Margin Trading through their peer-to-peer margin funding network allowing traders to securely trade with up to 3.3x leverage.

Individuals interested in Margin Trading can visit here. The traders have two option, either they can enter an order to borrow the desired amount of funding at the rate and duration of their choice, or they can simply open a position and Bitfinex will take out funding for them at the best available rate at that time.

Bitfinex now support leverage trading Ethereum Classic in ETCUSD and ETCBTC markets

BitMex

BitMEX or Bitcoin Mercantile Exchange is a peer-to-peer trading platform that also offers leveraged contracts that are bought and sold in Bitcoin. At BitMEX you would find crypto derivative instruments being sold and bought on margin trade.

BitMEX, the only exchange in the market that could provide 100x leverage, i.e., for every BTC/XBT you own, you can trade as if you have 100 BTC/XBT. However, perpetual Ether contracts can be leveraged up to 33x. It’s worth noting that BitMEX only accepts BTC deposits and no other currency, even the profit and loss are in BTC.

To start off trading on BitMEX you can register here.  You just need your email to set up and could secure your wallet using two-factor authentication. Bitmex is very high risk or high reward ether leverage trading; please trade cautiously knowing the risks.

References

Wikipedia, Bitfinex, Coinsutra, BitcoinDaily, Ethereumprice, MarginTradingBitcoin.

One out of five hedge funds has cryptocurrency-focused hedge fund

As per  Crypto Fund research in the first three quarters of 2018, a total of 90 cryptocurrency hedge funds were launched. The study also shows that about half of the crypto hedge funds started in 2018 were based in the U.S. Nevertheless, Australia,  Malta, China, the Netherlands, Switzerland, and the U.K have all seen various cryptocurrency hedge fund launches in 2018, as well.

Even though crypto funds are rising quickly, they still account for a small fraction of the overall industry, i.e., only 303 crypto hedge funds in operation. Crypto hedge funds also have less than $4 billion in assets under management, when compared to the broader hedge fund industry, which manages more than $3 trillion in assets.

Read more at bitcoinschannel

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