The information for every exchange out there should have a strong focus on security. Daniel Phillips. Deribit: 1. This advantageous technique keeps the risk as low as possible. Say, for example, that you had a long position in a particular cryptocurrency, and you felt fairly sure that its value would rise over a period of time. However, if you are good at regular day trading, you can start trying margins for smaller amounts for crypto trading. One of the key factors for choosing a crypto margin trading exchange is finding a good fit between the preferences of the trader, and the unique selling points offered by any particular exchange.
What is margin trading?
Cryptocurrency Margin Trading. Margin trading cryptocurrency exchanges Margin Trading A General Overview of Cryptocurrency Margin Trading Recently, there has been a lot of hype and publicity about margin trading as many cryptocurrency exchanges have implemented it on their platforms. Before now, margin trading was associated mainly with the commodities, forex, and stock market. In this article, we present a basic understanding of cryptocurrency margin trading, how it works, exchanges involved and its features. What is Cryptocurrency Margin Trading?
Bitcoin Margin Trading 101
Margin trading is carried out with the provision of leverage. When you place an order in the margin trading section, all the funds you use are borrowed from the exchange. Margin trading on the Binapex exchange is not available for certain currency pairs. In case of high volatility of any market, Binapex reserves the right to temporarily suspend margin trading on this market, notifying users about it. In order to trade on margin market, users have to pass the KYC procedure.
These are the best cryptocurrency exchanges for margin and leverage trading
Margin trading is carried out with the provision of leverage. When you place an order in the margin trading section, all the funds you use are borrowed from the exchange.
Margin trading on the Binapex exchange is not available for certain currency pairs. In case of high volatility of any market, Binapex reserves the right to temporarily suspend margin trading cryptocurrency exchanges trading on this market, notifying users about it. In order to trade on margin market, users have to pass the KYC procedure. When you borrow funds and make a trade, a position will open. If you buy, you are opening what is called a long position.
If you sell, you are opening a short position. Note that as you continue to trade, your position may change. For example, if you open a short position by selling BTC, but then buy BTC, your short position will become a long. When you close your position at a profit, the profit will be credited to your account. Position maintenance margin consists of 2 parts. The other part is a percentage for using borrowed funds to open a position.
The total value of these two parts makes maintenance margin. Note that maintenance margin value changes through time! The longer you hold your position open the longer you use borrowed fundsthe greater the maintenance margin amount shall be. The recalculation of interest for the use of the borrowed funds for open positions is carried out automatically every hour. The position is closed by the user. Position is considered to be closed at zero. A forced liquidation is when all or part of your positions are closed automatically to prevent further loss.
Forced liquidations occur when current price on the selected market reaches the close price:. It is strongly advised that you check the markets and your open positions regularly, mitigating your risk as necessary by reducing the size of your positions.
Markets can change very quickly, and no guarantee can be made that you will receive a margin call warning in time for you to prevent a forced liquidation.
The position closes when Buy or Sell dips below or reaches the close price. The interest for using borrowed funds is 0. First case. Note that in the same trading circumstances, but without using leverage, your profit would be So, the initial profit when trading with a leverage is multiplied by the leverage amount and then decreases by the amount of interest for using the borrowed funds.
Second case. If the BTC price starts to fall, then when it reaches a certain critical point, you will lose all of your deposit. In this case, this critical point will be slightly above The price for the position liquidation in this case does not exactly equals 27, ETH, because amount for paying back must also include interest for using borrowed funds.
The longer the period of using loan, the greater the refund amount will be. The change in the closing price is possible by increasing the margin. That is, by making an additional deposit to your margin account. For example, in the current situation, depositing additional ETH to margin account will reduce the closing price to about If the BTC price starts to rise, then when it reaches a certain critical point, you will lose all of your deposit.
In this case, this critical point will be slightly below 32, ETH for 1 BTC, because if the price rises beyond this point, even if all BTC are sold for example, at the price of 35 ETHyou will not be able to fully pay back the loan. The price for the position liquidation in this case does not exactly equals For example, in the margin trading cryptocurrency exchanges situation, depositing additional ETH to margin account will increase the closing price to about Usage of Binapex Ltd.
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