Whether you are trading crypto, stocks, forex, or other assets, you must have come across the term margin trading. This investment strategy is very common. However, it can be confusing, especially to new traders. This article will cover everything you need to know about margin trading in crypto.
What is crypto margin trading?
Margin trading is a strategy that allows you to trade with a larger amount than your balance. You can borrow money from a broker such as an exchange to trade and then pay it back later. Your brokerage decides how much you can borrow.
The best thing about margin trading is that you can open a big trade and reap high profits using borrowed money. Typically, it would help if you had an initial margin of 50%. But most brokers will allow you to borrow in small amounts such as 10%, 20, and 30%.
How much money do you need for crypto margin trading?
To get started with margin trading, the broker will ask you to sign an agreement. Next, you need to deposit money in your margin account. The platform that you are using may set a minimum amount of money required. E.g. Gate.io. Gate.io has placed its focus on the growing international market with 8-Year operating experience. This platform is known for its leading IEO, margin trading, diverse cryptocurrencies, and Defi. Gate.io currently supports more than 790+ currencies in close to 1700+ markets. The minimum amount of crypto margin trading is only $20 on Gate.io.
For example, you deposit 2000 USDT in a margin account and want to trade crypto with a margin of 50%. In this scenario, you can trade for up to 4000 USDT. That is your initial 2000 and the $2000USDT that your broker will lend you.
Is margin trading worth it?
Margin trading increases your trading power. This means that you will earn more if your position is winning. You need to be very careful because you can lose everything if it goes the other way round. The best time to trade on a margin is when you are sure the trades will win.
Another advantage of margin trading is that you can potentially get higher return ratios without tying up all your investable assets. Investing in a small number of assets gives the investor flexibility to buy other investments. This shields you from the risks of investing in one asset. Besides, it’s easy to jump into winning moves without liquidating your other assets when you have more cash at hand.
Margin Trading Vs Futures Trading
New traders often get confused by margin and futures trading. These two trading terms are common in the crypto industry. Margin involves borrowing some assets to participate in bigger trades. Conversely, futures involve a contract that allows investors to lock in the price of crypto using a contract.
Unlike margin trading, in futures, the trader does not own the underlying crypto. Instead, they use a contract that dictates the price for buying or selling on a future date.
The benefit of choosing margin trading over futures is that the trader enjoys more freedom regarding when and where to execute trades. Futures have their advantages too. They are very straightforward hence making estimation easy. Both strategies can be profitable but should be handled carefully because they have risks too.
Gate.io’s margin trading
Gate.io is one of the biggest crypto exchanges in the world. It comes with world-class features that are ideal for both beginner and pro traders. This platform is known for its leading IEO, margin trading, diverse cryptocurrencies, and Defi. You can amplify your earnings by margin trading on Gate.io.
Gate.io has a strict regulatory system. Gate.io provides risk management for users who enter into margin trading by monitoring their margin trading accounts and controlling risks. When the risk rate of your margin trading account is below a preset alert threshold, you may receive a risk warning message via SMS or email to remind you to control the risks.
On Gate.io, investors also can profit through lending funds to the margin account. The converted exchange rate is 100usdt 0.01 BTC. By lending funds, the lender can gain interest and the borrower must repay the funds on the due date. On Gate.io, a leverage up to 3-10X is allowed currently. For a market where 3X leverage is allowed, you can borrow up to 200 BTC giving you have 100 BTC as margin in your margin account.
Start by creating an account, deposit your assets, and then click on margin trading. Accept the terms and start trading right away.
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