A Beginners Guide to Cryptocurrency Investing

[EasyMoney]

What is 'Margin Trading'?

Margin trading is a form of trading for people who do not maintain a large amount of money to invest. It should be noted that this is considered an EXTREMELY high risk investment. I would not really recommend this to those members who are new to the world of crypto; however, I have seen some questions and posts about what it is and how it works. At a standard rate, the leverage will remain at a ratio of 1:1. In contrast, a margin trade allows the individual to open a margin position with a certain amount of leverage. Let’s say, for example, that the person wishes to double the leverage it would increase their position yielded.

How does it work?

Realistically speaking, this involve the presence of a lender; someone must be willing to front the funds for margin trading. The lenders will offer a loan to traders who will then invest larger amounts of coins that they would have without the loan. This form of investment does come with quite a bit of risks and potential costs.

Costs:

Interest Rate - All locations of funding will offer somewhat similar interest rates for the same amount of assets being borrowed. The user must pay that interest upon borrowing and/or selling the coins.
Fees - Opening a position with specific exchange websites (some of those mentioned above), does cost a fee. This fee must be covered by the borrower as well.


As goes the trend with essentially all investing, the more one can profit leads to a similar increase in the ability to lose money. With margin trading, it is a somewhat difficult concept to explain to new investors. The maximum amount that one can lose is the amount invested in order to open the position of borrowing. This level alone is often referred to as a liquidation value. Depending on how the exchange website works, when the value of the assets falls to the liquidation value all of the positions will automatically close so that the money lent to the investor will not be lost; instead, he/she will solely lose their own investments.


Recommendations when Margin Trading

• Recognize the Risk - Please continue with extreme caution. You should do a significant amount of research in order to fully understand the risk that you will be placing yourself into when beginning margin trading.
• Look at the history - There have been cases where people put proper auto-sale offers in place in order to protect their assets and to cash out with profit at a certain low. Sadly, exchange websites tend to dictate whether or not users can sell or buy at legitimately any time. Due to that, a significant amount of users were reporting that they had lost tens of thousands of dollars solely from the collapse during margin trading.
• Manage Closely - You should be very involved in cryptocurrency if you intend on margin trading. You will want to set up alerts to your mobile device when specific coins reach a certain range of value. The little things really help; always keep your eye on the money and you will have a lower likelihood of busting and reaching the liquidation value abruptly.
• Understand Movements of Valuation - One of the most important facets of cryptocurrency, right now, revolves around it’s instability in price. These alt coins can fluctuate 100’s of percentage points in weeks alone. It is important to recognize when to invest during a serious dip in value; thus, causing it to be very unlikely to reach the liquidation value of the investor.

Locations to Margin Trade

• Bitmex - A relatively new platform for trading, Bitmex has garnered quite a good amount of reputation and positive remarks. The margin trading allows a maximum leverage of 100x for long and short term. It is relatively easy to navigate and manage. Most importantly, they are one of the few platforms to offer caring support to their users.
• Poloniex - This has become the largest exchange platform for crypto at this point. They offer leverage trading of 10+ Altcoins including the extremely common and more stable assets. The leverage only offers a rate of 2.5x while charging massive fees for shorting margin trades. Overall, Polo has become the most reputable and discussed in regards to crypto investing in general.
• SimpleFX - This platform is available worldwide for margin trading. There is a 10x leverage for Forex, stocks, and multiple other markets. The crypto recognition appears to revolve mainly around BTC and ETH. I have not personally used this website; although, it maintains a nice reputation and looks to value the users on their website.
• WhaleClub - The margin trading on this website is also available worldwide. The crypto has a maximum leverage of 20x. The first deposit on the website offers new members a thirty-percent bonus as well. Again, I haven’t personally used the service but I have heard decent things about it.