You won’t have any concerns about your trades being filled on Weex, and slippage is also not an issue. Weex promises to keep slippage to a minimum, and if it happens to exceed a certain limit, the exchange will compensate you. Learn more about what spot and margin trading are, their pros and cons, and how you might choose between the two. On the flip side, if the margin trader’s portfolio performs well, lenders are regularly paid their interests according to the trade terms. By now, all of us know the fact that cryptocurrency trading is both risky and rewarding.

Any investor who chooses this option must complete an Eligible Contract Participant (ECP) form. Essentially, unless you meet “accredited investor” status or have millions of dollars in assets, it’s not likely that you’ll be able to margin trade via GDAX. Kraken is suitable for experienced margin traders as well as beginners who are looking to get started with crypto. Kraken’s Pro trading interface is filled with tools and advanced order options to satisfy the needs of experienced crypto traders. For those who are beginning to dabble with margin trading, Kraken is an easy platform to learn on.

Should I Margin Trade Crypto?

This process of trading more than you can actually afford is known as Margin Trading. Usually referred to as day trading, it can be highly risky and rewarding at the same time. To make life changing money through trading, a trader needs to be competent and use different trading methods. However 1x – 20x is more typical, with more conservative exchanges only offering up to 3x-10x. How much you can leverage differs by exchange and product type (for example on an exchange BTC/LTC might be 5x, but BTC/USD 2x).

  • As we have already discussed above, the trading method can also hit traders where it hurts by making them experience larger losses because its risk level is very high.
  • Kraken’s 24/7 Live Chat with a real person also helps to create a welcoming environment for new users who may have questions about margin trading.
  • More than 300,000 orders are executed every second, with over $1 billion in average trading volume per day.
  • Huobi launched their services in 2013 in China and now have their head offices in Singapore.
  • And when you fold, the exchange is coming for everything left on the table.

It will be marked-to-market every day based on the movement in the price of the underlying asset and will never reach a termination. The exchange in question will have maximum leverage (or minimum margin) that is required for you to take the position. Please note that the practice crypto trading availability of the products and services on the App is subject to jurisdictional limitations. may not offer certain products, features and/or services on the App in certain jurisdictions due to potential or actual regulatory restrictions.

Risks of Margin Trading

Phemex was launched relatively recently in Singapore in 2019, but has quickly climbed the ranks to become one of the most trusted crypto exchanges. It has earned a name as a powerful spot and margin exchange and offers leverage from 5x all the way up to 100x. Phemex also has a mobile app allowing you to easily trade on the go, no matter where you are.

  • Further, despite catering to US residents, Kraken offers a big variety of crypto tokens.
  • In most cases, the user can borrow funds through the exchange, and these funds are either sourced by other users who earn interest or by the exchange itself.
  • The margin trading interest rate on KuCoin changes frequently and can be referred here.
  • We will also give you some essential hints and tips as well as look at some of the best places to trade on margin.
  • Additionally, we highlighted some popular platforms for margin trading and provided tips for successful margin trading.

The biggest advantage of margin trading is that using leverage has the potential of amplifying positive returns. Let’s take a look at an example of a trader who bought $1,000 worth of Ethereum (ETH) at a price of $1,000 (i.e., they bought 1 ETH), – and subsequently, the price rose 10% to $1,100. With 4x leverage on his side, the exchange lent him an extra $750, giving him a cool $1,000 to invest in ether. As fate would have it, Jimmy’s instincts were spot-on, and ether’s price soared.


If your account equity falls below this level, you may receive a margin call, requiring you to deposit more funds or reduce your position. Margin trading is a trading technique that allows traders to borrow funds from a broker or an exchange to amplify their trading positions. It enables traders to enter into larger trades than their account balance would typically allow. In other words, margin trading allows traders to buy or sell assets using leverage, which can potentially lead to higher profits or losses. For investors who do not have the risk tolerance to engage in margin trading themselves, there is another way to profit from leveraged trading methods. Some trading platforms and cryptocurrency exchanges offer a feature known as margin funding, where users can commit their money to fund the margin trades of other users.

  • MEXC is my top pick of margin trading platform for those who live in the US, since Bybit is not allowed for US residents.
  • If you aren’t sure exactly what margin trading is (also known as leverage trading), then read my article which explains crypto leverage trading.
  • The liquidation price is the point where the exchange will force-close your position automatically.
  • KuCoin is the #4 margin trading crypto platform and this is due to the huge range of coins (more than 700+), low trading fees, and over 20 million users.

There are also a host of other things to consider when you are trading on BitMEX. You have many more options around trade functionality and risk management. If you wanted a complete overview then you are advised to check out our comprehensive BitMEX review. The key thing to appreciate about margin trading is that there are risks and that these risks can be significant if you do not have a strategy. In order to avoid the latter outcome, some brokerage firms will require what is called a “Maintenance Margin”. This is the minimum that is required to be held in the margin account once the trade has been opened.

StormGain: Best Bitcoin Margin Trading Exchange

Weex has next-gen security measures, with an AI-powered risk control system as well as a dual-level account-risk management system. They even hold 1,000 BTC in reserve as a user protection fund, to cover any unforeseen circumstances where users’ assets are stolen. Without any doubts, margin trading is a rewarding tool for traders who want to enjoy higher profits from successful trades. If applied properly, margin trading has the ability to bring traders remarkable income and also to help them diversify their portfolio. Having been in existence for quite a while, Bitmex is one of the pioneers of crypto margin trading.

If you want to read more about portfolio margin, their option instruments or more about their advanced platform then you can read our complete Deribit overview. Once your position has been opened then BitMEX has a more refined calculation for the maintenance margin. You won’t get a margin call from BitMEX but they will draw on your funds or, in the event of fund depletion, they will liquidate your position. This means that if you would like to take a position in Bitcoin you will need to put down 20% of the amount of the notional of the trade. So, if your position is in 10BTC you will need to put down 2BTC as collateral or margin.

Common Terms on Exchange

Traders will typically have to pay interest on the borrowed amount for the duration that they hold their leveraged positions. The interest rate may vary depending on the platform or exchange, so it is essential to be aware of these charges and factor them into trading strategies. When engaging in margin trading, traders are required to maintain a certain amount of funds, known as the “initial margin,” in their accounts as collateral.

  • The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price.
  • They also offer up to $90 as a free joining bonus, which you can use for margin trading.
  • Leveraged tokens are standard crypto tokens and can be listed on any spot exchange (even those that do not allow margin trading).
  • Furthermore, different platforms may have specific rules and requirements for margin trading.

One benefit that KuCoin offers to its users, are discounted trading fees if you pay using their native token, KCS. When you pay using KCS, you receive 20% discount, so the fees are reduced to just 0.08%. If you have a high trade volume in the last 30 days, you can reduce your fees even further. It is crucial for traders to understand that margin trading can lead to significant losses if not approached with caution.

Price manipulations: short/long squeeze

It is essential to thoroughly assess these risks and carefully consider your risk tolerance and financial capabilities before engaging in margin trading. Traders should have a clear risk management strategy in place, including setting stop-loss orders, diversifying their positions, and being prepared for potential losses. It’s important to note that policies for margin trading vary greatly from exchange to exchange. Some cryptocurrency exchanges have very strict policies for margin trading. In contrast, others are much more flexible in regards to who can participate in margin trading. GDAX is an example of a relatively strict exchange in regards to margin trading.

In comparison to GDAX, Kraken is an example of a popular cryptocurrency exchange that doesn’t have as many obstacles for smaller investors to get started with margin trading. According to the exchange website, verification of information like full name, date of birth, country and phone number are required to become a Tier 1 – investor. It requires users to upload proof of available funds, identity document (i.e. passport), proof of residence document, signed KYC documents, and more. Margex only supports 13 different cryptocurrencies (BTC, ETH, EOS, LTC, XRP, ADA, SOL & YFI), which can be an issue for some traders who want a wider range of coins.

Must-Have Tools for Successful Crypto Trading (+Expert Picks)

But you need to understand that there is an equal risk of your initial investment getting reduced to $100 in a day or two. Now, let’s get down to business — below are your crypto margin key concepts. Even though traders tend to rely mostly on technical analysis, keep in mind that those events might have a critical impact on the market. It’s not out of the question to see the occasional short and long squeeze events, which also has to do with the current size of the market. The margin call coefficient or “Adjustment Factor” will vary according to the risk of the position and the individual instrument. When the Maintenance Margin Rate falls below 0 then Huobi will initialize a liquidation on your position.

The exchange has a team of brilliant and dedicated economists, and developers, which is a must-have if the business wants to thrive as it is currently doing. Margin trading can really cause damage to a trader in the form of losses if the trade is unsuccessful. In fact, the losses resulting from margin trading is so bad that they go beyond the trader’s initial investment. Naturally, margin trading comes with a lot of risks when compared to regular trading, but in cryptocurrency trading, the risks are even greater. In fact, it contributes to the reason why margin trading is a big risk.

Example of Cryptocurrency Margin Trading

You may obtain access to such products and services on the App. The exchange charges a trading fee of 0.25% from takers and 0.15% from the makers. The team comprises experienced developers, economists, and high-frequency algorithm traders, which makes it a reliable product. The BitMex is not available for U.S.-based customers, however, you can bypass this using any VPN service. With that said, because you are borrowing money, you owe the money back along with any applicable fees, no matter what.

  • When you progress high enough, Binance actually starts paying you for crypto margin trading.
  • If you wish to change the max account leverage, click the gadget below the margin toggle.
  • Also consider the withdrawal limits, your margin requirements, trading volume, and the maker and taker fees.
  • He not only managed to repay his loan, but he also pocketed a tidy profit to fuel future trades or grow his capital.

Does the exchange support the specific trading pairs that you want to trade? Also consider the withdrawal limits, your margin requirements, trading volume, and the maker and taker fees. The main benefits of spot trading over margin trading are that it is simpler and does not involve the potential amplification of losses that margin can entail. It is simpler because a trader does not have to deal with things like margin calls and deciding how much leverage to use.