In this article, we will discuss everything you need to know about Margin Trading from the definition, Platforms, tools, technical indicators,tips and resources.
After a brief silence of two years, the Cryptocurrency market is finally coming out of woods and making new highs since the start of this year. Bitcoin is currently trading above 9000$, and Cryptocurrency market cap is valued above 280B$. Few Altcoins – LEND, REN, REQ etc saw a massive surge in value in past few weeks. Bitcoin alone, has recorded 40% price growth since january. After this recent surge, the overall market’s structure is looking bullish and It’s the time to get into right opportunities to make maxmium profits.
Let me introduce Margin Trading, which is one of the most lucrative methods to make maximum gains out of this bull market. Margin trading has emerged as one of the popular way for trading in last two years.
Margin Trading
Margin trading is a form of trading in which you can borrow extra money from an exchange for trading purpose. The extra amount of money which you borrow is called as a leverage. For example if you have 100$ account for trading, then using 10x leverage you can borrow 1000$ for trading.
” Margin trading is risky/volatile in nature as compared to normal spot trading. Our advice is to get basic technical analysis course before you get started your margin trading journey.”
Free course on Technical Analysis
Top 3 Margin Trading Platforms
BitMex
BitMex is one of the oldest and most used exchange for margin trading. It offers upto 100x leverage on Bitcoin trading, upto 50x leverage on XRP and ETH trading and upto 20x leverage on Tron, EOS, Bitcoin Cash and Litcoin.
Learn more about BitMex Exchange
FTX
FTX is a relatively new exchange, but recently emerged as most favouble exchange by traders around the globe because of its functional user interface. FTX offers upto 101x leverage on Bitcoin, Ethereum, Tezos, Algorand, Matic, Tomo and 20 more pairs.
Binance Futures
Binance launched Margin Trading offering last year, and responded well by traders around the world. Binance offers upto 50x leverage on Bitcoin, NEO, VET and 15 more pairs. Binance is continuously adding new trading pairs on its platform.
Learn more about Binance Futures
Start trading on Binance futures
Top 3 Margin Trading Glossary
Funding Rate
Funding rate changes after every 8 hours on BitMex.
When funding rate is positive – Long positions pays fees to Short positions.
When funding rate is negative- Short positions pays fees to Long positions.
Open Interest
Usually, when open interest reaches unusually high numbers (over 100,000 Bitcoins) we’ll see an increased volatility in Bitcoin’s price.
Margin
There are two types of margin which you can choose from –
Isolated Margin – Using isolated margin, user can pick desired margin from 1x to 100x (offered by an exchange).
Cross Margin- When user select cross margin, His entire balance will be on stake. Margin get automatically adjusted according to the direction of the trade.
Check out list of all margin trading related glossary here
Top 3 Margin trading tips
Use low leverage
Go slow, don’t try to become rich in one day. 100x leverage sounds lucarative, but its equally dangerous, it could wipe out your whole account within minutes in case you are at the wrong direction of the trade. We would advice you to use low leverage, in fact don’t use leverage above 5x for regular and consistent profits.
Don’t take advice from trollbox
BitMex has a feature called TrollBox – where traders discusses about their trade positions. 99% of them are pure gambling without any technical knowledge. we would advise you to simply disable trollbox window when you are trading on bitmex and similar platforms.
Focus on Swing trading
Focus on long term trades based on Daily, weekly timeframe. Swing trades has a better success rate as compare to day trade. Build position in parts when you take a swing position on bitcoin or any altcoin.
Top 3 Technical Indicators
Before you start with Margin trading, create an account on TradingView. Once you create an account, add these three simple but effective indicators on your chart window.
Top 3 Trading Strategies
MACD Crossover
Success Rate: above 70%
Golden Cross & Death Cross
Success Rate: above 60%
Bullish & Bearish Divergences
Success Rate: above 55%
Top 3 Technical Patterns
Top 3 Tools
Top 3 Resources
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Top 5 technical indicators to use
Final words
I hope, you will get all required information from this article to start your margin trading journey. Make a plan, trade with low leverage, focus on swing trade and I am sure you will make a great profits from margin trading. Goodluck.
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