What Is Crypto Margin Trading? Explaining with Bexplus

Cryptocurrency

July 21, 2019 by Editor's Desk

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According to some experts, current bitcoin volatility is also partly due to margin trading becoming more and more popular. But how does it work and why it’s profitable? Bexplus crypto trading is here to explain Margin trading is a type of assets trading by using funds provided by a third party. Compared to regular trading

Margin trading is a type of assets trading by using funds provided by a third party. Compared to regular trading accounts, marginal traders have access to more funds, which allows them to use these funds in their positions. Essentially, margin trading increases the performance of the trading, so traders can get more profit from successful tradings. This ability improves the performance of trading operations and also makes margin trading popular in low volatility markets, especially in the international Forex market. However, margin trading is also used in stock, commodity and cryptocurrency markets.

Margin trading begins after the trader fixes a percentage of the total value of his order. This initial investment is called margin and is closely related to the concept of leverage. In other words, margin trading accounts are used to create transactions using borrowed funds, and leverage describes the ratio of borrowed funds to margin. For example, to open a deal of 10 BTC with a leverage of 10: 1 (10x), the trader will need to fix 1 BTC of his capital.

Basically, various trading platforms and markets offer their own clear set of rules and leverage. For example, in the stock market, the generally accepted ratio is 2: 1, while futures contracts often trade with a leverage of 15: 1. As for brokerage operations in the Forex market, margin transactions are often used in the ratio of 50: 1, but there are exceptions with a leverage of 100: 1 and 200: 1. When it comes to the cryptocurrency market, the ratio usually starts from 2: 1. The trading community uses the terminology “x” meaning the multiplication of your funds in this type of transaction (2x, 5x, 10x, 50x, etc.). Bexplus allows investors to trade BTC futures with 100x leverage, which means that you do not need a lot of money to trade big: by just investing 0.01 BTC there is a chance to gain profit of 10 BTC.

Margin trading can be used to open both long (buying) and short (sell) positions. A long position suggests that the price of an asset will rise, while a short one reflects the opposite.

Advantages and disadvantages

The most obvious advantage of margin trading is the fact that it can lead to greater profits due to an increase in the relative value of trading positions. In addition, margin trading can be useful for diversifying risks, since traders can open several positions with relatively small amounts of investment capital. Ultimately, having a margin can make it easier for traders to quickly open positions without having to transfer large amounts of money.

Despite all its advantages, margin trading has an obvious drawback – increasing losses in the same way as increasing profits. Bexplus allows investors to maintain risk prevention by using stop-loss order: in case if you haven’t opened the position correctly, you won’t risk your money.

Of course, it is important for investors to have an ability to analyze charts, identify trends and entry and exit points.

Margin trading is a useful tool for those who want to increase profits from their successful transactions. If used correctly, this type of trading with leverage can contribute to both the profitability and the diversification of risks in your portfolio.

Why Bexplus is different from other trading platforms?

Availability of trading simulator

Especially designed for beginner investors, Bexplus allows you to try trading by using a simulation model. It’s equal to real trading and allows you to learn how to beat on price directions before you deposit real bitcoins.

Easy to use

Bexplus has simple user interface, which more suits to beginners. No excessive information, only what you need.

Various promotion activities

On Bexplus you can gain profits not only by trading, we invite our clients to participate in various activities: for example, we provide 100% deposit bonus to each user. By depositing 0.1 BTC you’ll have 0.2 BTC which you can use for trading.

Also, this July users can earn BTC by inviting friends to Bexplus, and receive valuable gifts by depositing certain amount of coins: the gifts vary from Amazon Gift Card to iPhone XS Max!