Margin or leverage trading has become increasingly popular in comparison to the growth of new exchange platforms that offer leverages. Existing exchanges have also started including platforms for leverage trading or escalated the leverage allowances that they provide to meet the growing demand for leverage trading.
What is leverage in Crypto trading?
Leverage refers to funds that traders borrow to increase their trading volumes and market exposure. It’s the amount that your initial investment or margin can increase by and is shown, for example, as 1:100 or 100x. Leverage is used as collateral should the cryptocurrency asset’s market value move toward the opposite direction.
Traders can only lose the margin leveraged. Leveraged trading means you can profit from rising and falling asset markets as long as you leverage both the short and long positions. You close your trade once your high or low leverage targets are reached. In other words, leverage is debt used as a practical option for when you don’t have the funds to trade as you would like to.
What are the risks?
Exchange rates differ between the various cryptocurrency conversions. Most brokers sell the bitcoins immediately and convert the amount into USD for holding. You must make sure that you understand what Bitcoin exchange rates the forex broker uses and how they affect your cryptocurrency value.
Even when you do not trade your funds immediately, your crypto value is still subject to the USD value fluctuations. We do not recommend leaving funds on an exchange when you don’t plan to use them immediately. Unregulated brokers use volatility for trading to their favour.
This is to the detriment of the trader as when you withdraw your funds and the broker exchanges it back from USD to your currency. They may give you the lower rate that you initially exchanged for when depositing and then pocket the difference at your expense.
Where can I trade?
Below are some of the top platforms that offer leverage trading features.
ByBit offers leverages up to 100x and as much as $90 in joining bonuses to be used for margin trading. The fees are low, and it does not have Know Your Customer (KYC) requirements. It offers a mobile app with a fast trading engine. ByBit also provides customer support 24/7.
Binance is one of the best exchanges globally and offers maximum trading volume with 5x margins. It follows KYC protocols, and you can repay leverage debt using Binance coins (BNB) to get awarded a rebate of 5%. 29 countries are blacklisted on Binance so you will need first to see if your country is on that list.
Deribit’s leverage trading platform is available to all countries. It offers leverages up to 100%. Deribit only accepts deposits in BTC, and the exchange operates 24/7.
BitMEX provides leverage trading in six cryptocurrencies. It has high liquidity in Bitcoin and doesn’t charge deposit fees. It offers a feature for stop-losses but does not follow KYC requirements. BitMEX offers different margins per crypto and is not available to U.S. citizens.
Huobi Pro offers multi-language support and platforms for international crypto trading. It follows strict KYC procedures and has offices in five countries. Huobi Pro offers margins of up to 5x in various cryptocurrencies.