Last updated on May 26th, 2022 at 08:02 pm
Crypto Leverage Trading Exchange: If you want to trade but do not have a large deposit, there is a way to strengthen your trading position and make a fortune – margin trading. Many large crypto trading exchanges offer this function to users. In this article, we will talk about trading with leverage, how it works, and what platforms offer it.
Let’s begin with crypto margin trading exchanges:
The WhiteBIT crypto exchange is one of the youngest platforms that offer trading with leverage.
What is Leverage Trading?
It is like trading with borrowed funds. You can add a couple of zeros to your amount and trade with this position, thus, receiving multiply profits.
The leverage can be 5, 10, and 20 times bigger than the amount you own. If you have $50, with leverage, you can place the position for $500.
First, you should replenish your account with the amount you have got, which will be the collateral. “Margin” stands for the position opened with leverage.
A crypto leverage trading exchange supplies leverage from a reserve. Exchange users also can deposit in this reserve, renting them out and receiving interests for holding their assets on the exchange.
On the crypto exchange Poloniex, other users provide loans for leverage trades. For example, users can provide their coins as a loan for margin trading and earn a percentage.
So we have found out the resources for leverage trading. Now let’s see how it works from the perspective of a user who borrows leverage.
How Margin Trading Works
When you take leverage, you have to pay the commission. The fee goes to the crypto leverage trading exchange or to other users who actually provide loans for leverage trading.
If a trader makes the wrong decision, the maximum amount he loses is the sum of the position the deal was opened with. It is called “liquidation value” – the exchange closes the position automatically.
If the rate of the asset drops by the sum of the position, the position is automatically closed and not in a trader’s favor. So the risks in margin trading are high, provided that crypto assets are very volatile and the market may change trends in minutes.
Wrapping up, before borrowing funds to trade with leverage, you should assess the risks. It is recommended to begin with small leverage. Remember, even a 1% fluctuation in the asset price can end up with your position liquidation.
Pick a credible crypto exchange for trading. The White BIT platform allows practicing trading on a demo account.