Crypto margin trading can be an amazing way to bolster your investments. In this article, I will try to dispel some of the mystery surrounding this and provide you with three platforms that I feel is great for leveraging on the cryptocurrency you want to trade.
Margin trading is a form of borrowing, where investors can leverage on the crypto assets they possess, or buying a small percentage of cryptocurrency and having the broker lend you the rest.
To give you an example; let’s say that the price of Bitcoin is $10,000 and you only have $5,000 of trading money available. With margin trading, you can use this five grand and have the broker lend you the rest. Now, if the price of Bitcoin goes up to $11k and you close your position, you repay the five thousand that you borrowed and take your initial investment along with the entire $1k return.
This means that you have made a 20% ROI. Without margin trading, you would have had to invest the entire $10k and as such, only made a 10% return under the same conditions.
Obviously, this can be a fantastic trading tool, but it must be said that with the potential for greater returns also comes higher risk. You can lose just as much and end up paying interest on your loan besides. For this reason, it is of paramount importance that you do your research to fully understand margin trading before you begin to use it.
If you feel confident that you are familiar with the mechanisms involved, you’re going to need a platform to trade on. Here are my top three platforms for margin trading on cryptocurrencies.
Founded in 2007, eToro has become one of the leading trading platforms around. The company launched its cryptocurrency wallet in 2018 – offering 10 leading coins for trade. This list has now been expanded to 15 crypto offerings including Bitcoin, Ethereum, Litecoin, Ripple and even the privacy-based coin Zcash.
Users of the eToro platform can apply x2 leverage to all cryptocurrency trades, and enjoy other unique aspects including the Copy Portfolio™ feature, where investors can copy the successful trades of others.
As online brokerages go, eToro has a solid reputation with over 13 million users across 200 different countries worldwide.
For those who are new to investment trading, eToro provides a wealth of educational resources, which you should take full advantage of before getting into margin trading.
The Australian-based brokerage platform, Pepperstone, earns the second spot on our list today. This highly regulated site is known for its robust security and high leverage options. Popular among scalpers due to its fast executions, tight spreads and automated systems, Pepperstone also requires the smallest minimum deposit of any trading platform in this listing.
Pepperstone offers CFD’s on 6 leading cryptocurrencies:
- Bitcoin Cash
A massive 20:1 leverage can be applied to any of these digital assets, which is a great attraction to investors who are already confident with margin trading. The brokerage allows trading through web, mobile and desktop and is available in 41 different languages.
The official partner of the Premier League football club, Aston Villa! Skilling is a Scandinavian-owned platform with a vision of simple and accessible trading in a safe and transparent environment. Based in Cyprus, Skilling is regulated by CySEC and operates in all EEA countries. The broker is also regulated by Seychelles FSA, allowing further operations outside of the EU.
Skilling offers 5:1 leverage on all of its available cryptocurrency CFD trades which include:
- Bitcoin Cash
In just a few short years, Skilling has managed to establish itself as one of the world’s leading brands. With a fantastic user-interface, comprehensive trading tools and an array of educational resources, this brokerage attracts investors of all levels of experience.
A final note on Margin Trading…
As mentioned above, margin trading can be a superb tool to improve the gains made through CFD trading when used responsibly.
A key reason why these three platforms made it to our list today, is that they are all reputable, regulated, and offer a vast range of educational resources. You should learn all you can from these and make use of the demo account that allows you to put into practice all you have learned safely.
Margin trading provides us with fantastic opportunities to earn from the price movements of these new and exciting digital assets but also carries greater risk. Learn all you can to be able to trade with confidence, and never invest more than you can afford to lose.