You want to trade crypto currencies, but you only have a small amount of money. What if we told you there was a way to increase your long and short positions on Bitcoin by 2X, 5X, 10X, or even 100X without having to have the capital needed to open such positions? Welcome to trading Bitcoin on the margin!
This article will talk about the best crypto margin trading platforms for trading bitcoin on margin. We’ve also given you a list of the best tips for trading bitcoin on margin.
What Does Margin Trading in Crypto Mean?
Margin trading, or Bitcoin margin trading as most people call it, is thought to be one of the most profitable and risky ways to trade. It lets you trade with leverage by borrowing money from the exchange.
To get started, all you have to do is join one of the cryptocurrency exchange platform development and turn on your margin trading account.
Then, you can use the platform to ask for a loan and trade with the money you get.
For example, if you opened a margin trading account for Bitcoin with a 2X leverage and the price of Bitcoin went up by 10%, your position will make you a 20% profit because of the 2X leverage. Without leverage, the ROI would have been only 10%.
Margin leverage can also go up to 25X and even higher, but the risks are higher. Now, the same position will make 250%. (instead of 10 percent with no leverage).
What are the pros and cons of margin trading in crypto?
To make a long story short, trading virtual currency on margin could be very profitable, give you access to more funds, help you diversify your positions, and teach you how to trade. The higher relative value of the trading positions is the reason why there is a lot of money to be made. After all, margin trading is great for diversification because it lets traders open multiple positions with a small amount of capital.
But, like any other trading strategy, trading crypto currency
on margin has its downsides. It is very risky, has a lot of ups and downs, and can cause big losses. In forex trading, unlike regular trading, a trader can lose more than what they put in.
How does trading on the margin with Bitcoin work?
- Once you’ve opened and logged into your margin trading account, you’ll need to deposit some money.
- Next, you can apply for a BTC loan using the money you have already deposited as collateral.
- You will be charged daily interest, which changes often based on the exchange rate.
It’s important to note that the exchange doesn’t pose a lot of risks by itself, since each position has its own liquidation price that depends on the level of leverage.
Isolated and Cross Margin Trading
Before we talk about the best Bitcoin margin trading platforms of 2022, let’s quickly talk about what isolated margin trading and crypto cross margin trading are and how they are different.
What is isolated margin trading?
By putting a limit on the amount of margin at each position, an isolated margin lets you limit the risks of a trade. So, if your fund reaches its liquidation price, you will only lose the money for that position.
What is cross margin trading?
When you cross-margin trade, you spread the value of all of your assets over all of your open positions in your margin account. It can keep the position from going bankrupt because other positions can help the position in loss. Cross margin trading is most popular among professional traders and investors who want to protect their existing positions.
The best platform for trading crypto on margin
Top Crypto Margin Trading Platforms
There are a lot of options on the market, and we’ve put together a list of the 5 best margin trading platforms for bitcoin based on their features.
1. Binance Margin Trading
Bitcoin margin trading at Binance is like spot trading, but you have to borrow money and the risks are higher. Binance is one of the best places to trade bitcoins on margin in terms of volume. It is also one of the biggest places to trade crypto on margin in the United States. You can cut your trading fees by 25% if you use Binance.
Pros of Binance Margin Trading
- Margin trading by itself
- Cross margin trading
- No fees
- Level of margin
- Maintenance margin
- Protocol for security that leads the industry
- Traders can use Bitcoin, Ethereum, XRP, and other currencies with a 1:3 margin.
- Binance Margin Trading Has Its Downsides
Cons of Binance Margin Trading
- Could be a bit much for someone just starting out.
- All of your orders with a margin go to the spot market.
- Does not accept most common ways of paying
2. Bityard Margin Trading
Bityard, an exchange in Singapore, is ranked as one of the best places to trade bitcoins on margin. They use isolated margin trading, which helps you keep your whole fund safe even when the fund is being liquidated.
Features of Bityard Margin Trading
- Margin trading by itself
- Interface that can be changed and is easy to use
- Market trading fee that is competitive
- Own a license to do business in four countries
- Trading in Isolation
Bityard gives you the chance to use leverage through margin trading. As we’ve already said, isolated margin trading lets you borrow money for each position separately, so you only lose money from that position if it’s liquidated.
3. Kraken Margin Trading
Kraken is a platform for margin trading that is based in the US and offers its services in more than 175 countries. It lets you magnify your trades by letting you use more complex trading strategies.
Features of Kraken Margin Trading
- Beginner-friendly
- One of the safest ways to trade crypto on margin in the US
- Charge low fees for trades that use leverage.
Drawbacks Of Kraken Margin Trading
- Only gives a maximum leverage of 5x.
- Verification takes a long time
4. BitMEX Margin Trading
BitMEX, which is based in Seychelles, is one of the best places to trade bitcoins on margin. They give traders on the crypto market a platform that is fast and safe. The platform lets people buy and sell BitMEX futures and swaps.
Features of BitMEX Margin Trading
- High leverage and access to cash
- Reasonable fees for trading Bitcoin on the side
- Helps keep things secret
- No fees to put money in or take it out.
- BitMEX Offers Isolated and Cross-Margin Trading
BitMEX has some problems.
- User interface that is too old
- Exchange is said to be doing things that are against the law.
5. Poloniex Margin Trading
Poloniex is a platform for margin trading in bitcoin that is based in the Seychelles. It allows lending, spot trading, margin trading, and staking. According to CoinMarketCap, as of March 2021, Poloniex was ranked 13th in dollar value volume for crypto margin trading in the US.
Features of Poloniex Margin Trading
- High cash flow
- No verification needed
- Chatbox is a part of
- The Poloniex Market
Your initial margin and maintenance margin levels determine your leverage at Poloniex, and you can get up to 100X leverage. There are different levels of fees, and you can also apply for the silver and gold levels.
Cons of Margin Trading on Poloniex
- Hacked in 2014, and 12% of user assets were lost.
- High rates of interest on loans
Is Crypto Margin Trading Safe?
Before you make a margin trade on any trading platform, make sure you know that both gains and losses are magnified. When the markets for crypto move in your favor, you’ll make more money. On the other hand, if the price moves in the opposite direction of what you thought it would, you could lose a lot of money. So, trading on margin is not a good idea for people who are new to trading cryptocurrencies.
As a margin trader, you must also keep a certain percentage of the value of your position on the exchange at all times in order for that position to stay open. If you lose more than a certain amount, called the liquidation price, on your position, your order will be closed automatically.