Crypto Margin Trading

The 10 best Crypto Margin Trading Exchanges:

  • BitMEX.com
  • PrimeXBT.com
  • BitSeven.com
  • Monfex.com
  • SimpleFX.com
  • Etoro.com
  • BaseFex.com
  • CEX.io
  • Deribit.com
  • Overbit.com

 

Leverage ratios for each coin and exchange:

Monfex.com: Bitcoin / 50x, Ethereum / 10x, Monero / 10x …

Monfex Bitmex PrimeXBT

Crypto Margin Trading Exchanges without KYC ( Anonymous Crypto Margin Trading )

-> #anchor to jump to in the menu

 

Other crypto-tradeable assets supported by the Crypto Margin Brokers:

Gold, Crude Oil, Stocks, Forex etc.

 

The term “margin” (sometimes referred to in German as margin) is used in credit-financed or leverage-based exchange trading. It is the amount deposited as collateral or pledge for a trade. In return for the margin, the trader receives a loan with which he can trade.

The term margin is commonly used in crypto trading, where leverage is used. “Trade on margin” means nothing other than betting on a certain price performance with a larger leverage amount.

If the bet goes wrong or the price develops unfavourably, it may be that the margin amount is too small and must be increased (margin call) or the position must be closed out. In the worst case, the trader is threatened with high losses, which can far exceed the margin amount.

Margin Calculation

In a margin deposit you can use borrowed capital for your own trading. Here we explain the basic functions of margin trading.

In a margin deposit, you have the opportunity to buy shares and other assets with borrowed capital and thus leverage your investment. In addition to the available cash, your eligible securities are used to determine whether a loan is possible. Collateral is generally the total value of all equity positions + the value of your cash holdings. The system requires cover (margin) for each stock position that you open.

If your position runs against you and the collateral deposited is no longer sufficient to meet the required margin, the system can automatically close out positions. There is no separate notification. For more information, see ” Automatic Spending Limitation.

Note: The lending of securities in a margin deposit requires a deposit value (equity incl. loan value, information on this under ” Account window) of at least USD 2000 or the equivalent value in another currency.

Margin cover is the minimum amount of collateral that must be available in your portfolio to cover it:

  • the transaction is executed (initial margin) or
  • the position can be held (Maintenance Margin).

In the trading platform, the value of the total collateral is displayed as Equity incl. Loan Value. This corresponds to the value of all stock positions + the value of your cash holdings.

In order to open a new position, the existing total collateral must be at least equal to the required initial margin. Read more.

What is a margin call?

In CFD trading and Crypto trading, brokers work with a margin. This margin only covers a small part of the trading volume, but must always be provided by the trader. However, if this is no longer sufficient due to interim price losses, most CFD and Crypto brokers alert their clients with a margin call.

Margin as collateral

In both Crypto and CFD trading, brokers work with leverage and margin tied to leverage. This is a security deposit and is – depending on the leverage – in most cases between 0.25 and 10 percent. For example, with a security deposit of five percent, the customer only has to hold five percent of the trading volume as his own capital on his trading account. For example, if you want to trade US dollars for the equivalent of 100,000 euros, you have to keep at least 500 euros of your own capital on your trading account with a margin of five percent and use it for the trade.
What is the margin call?

The margin must be sufficient at all times as it serves as collateral. Now it can of course happen that the interim price losses for a position are so high that the margin available on the trading account may no longer meet the security requirements in a few minutes. In the previous example, this could mean that with a required margin of five percent, there are now price losses of just under five percent. In this case, most brokers work with a margin call.

This is practically an alarm and should inform the trader that his security is currently just sufficient, but even the smallest further negative price developments could lead to the fact that there is no longer sufficient margin. The “problem” for the trader in this situation is that most brokers have committed themselves to ensuring that no greater losses can arise for the trader than he has invested capital. Thus, the position would have to be closed automatically to prevent this from happening.

What does the trader have to do in case of a margin call?

The exciting question now is how the trader can react to a call. Basically there are the following scenarios:

  • Increase the margin on the trading account and thus secure the position.
  • Ignore margin call and position will be closed by broker in case of further small losses
  • Ignore margin call and reduce losses so that position can remain open
  • Trader is subject to the obligation to make additional margin calls

The last point is no longer relevant today due to newer EU directives, at least for brokers located within the EU. Normally, CFD and Crypto brokers have to rule out the obligation to make additional contributions, so that the client cannot lose more capital than he has invested. However, this does not automatically apply to all Crypto and CFD brokers, so it is essential that you find out whether your provider has an obligation to make additional contributions or not. If this is not the case, you may even lose significantly more capital than you have invested.

In this context, the margin call is therefore a well-intentioned help or warning on the part of the broker so that you are not obliged to make additional contributions or so that your position is not automatically closed and you would thus lose your capital investment.

What is the margin?

There are a few technical terms that you should know about Crypto trading before you start trading. These include, for example, margin, which is a security deposit. You must deposit this in order to be able to trade currency pairs using a lever.

How does crypto exchange trading work?

In order to understand what margin is, it is important that you are familiar with the basic functioning of crypto trading. This was based on the fact that the broker uses the lever to lend you by far the largest part of the respective trading volume as capital. In this way, it is possible to achieve high profits with little capital investment. But of course there is an equally high risk of losses. It is also important to know that the level of leverage and the margin are directly related.

What is the leverage?

The leverage is a capital loan from the Crypto broker and it is a multiple of the capital that you yourself use Crypto trading. Typical levers range from 10:1 to 500:1, so if we take a leverage of 100:1 as an example, the broker would lend you 100 bitcoin for every bitcoin you use Crypto trading. For example, if the exchange rate were to rise by one percent, you would make a profit of 100 percent on your capital investment.

Margin is a security deposit that you must deposit in your trading account. It is only a very small percentage of the trading volume that the broker uses as collateral. Depending on how high the leverage is, the margin is usually between 0.25 and 10 percent. With a margin of five percent, for example, you only have to keep 500 francs in your trading account as a margin, provided that you want to buy US dollars for 10,000 francs.

What is the relationship between leverage and margin?

There is a close connection between leverage and margin, because both variables depend on each other. To illustrate this, we would like to use the following three examples to show you how the two relate to each other:

  • 20:1 (leverage) – leads to a margin of 5%.
  • 100:1 (leverage) – leads to a margin of 1%.
  • 400:1 (leverage)- leads to a margin of 0.25%.

The calculation is very simple: The leverage multiplied by the margin must always amount to 100. So if you have a leverage of 400:1, as in the example, multiplied by a margin of 0.25 percent, you get 100. So, in principle, based on the leverage estimated by the Crypto broker, you can always calculate what the margin on the trading account must be.

If this is no longer sufficient, which is always the case if the price loss is higher than the percentage margin, many Crypto brokers work with a margin call.

 

Margin Trading Crypto Currencies with Leverage

Crypto Trading offers an alternative to trading in securities and binary options. The market is enjoying increasing liquidity and offers good opportunities to make profits with Crypto Trading. In this article, we explain what is needed to get started and how you can get started trading with Bitcoin & Co.

Requirements for Crypto Trading

To start trading Crypto currencies you will need a Crypto Wallet and a trading platform. Once everything is set up and the account has been successfully verified, it is as simple as filling out a form and waiting for the transaction to be processed.

In other words, if you want to trade crypto currencies, you need:

  • One Wallet for Crypto Currencies (or two)
  • Access to a trading platform for crypto currency exchange (or two) for trading.

 

Crypto Wallets

A Crypto Wallet is the place where you store encrypted passwords and coins (the synonym in the real world is the bank account). A crypto currency exchange is like a stock exchange or like a currency exchange at a foreign airport. At these exchanges, crypto currencies can be exchanged for other crypto currencies and paper currencies such as US dollars and euros. Just like trading shares, you need a bank account and access to the stock exchange. Crypto trading works with the same mechanisms.
What you should know before you start Crypto Trading

There are few things about trading crypto currency to know that go beyond the above. Below are some of the most important things you should know before you start trading Crypto:

A Crypto currency exchange does not take place on the regular exchange. In the following we will explain how Coinbase works. You can also use GDAX, the pro version of Coinbase with lower fees or another marketplace.

Enter crypto trading on the stock exchange

It can be interesting for beginners to trade crypto currency stocks on the stock exchange. GBTC is a trust that owns and sells Bitcoin shares. By buying and selling these shares, no direct investment in Bitcoin is required. The above-mentioned registration with a platform and the wallet are not necessary.

GBTC shares are traded at a premium. This means that Bitcoins are cheaper than buying GBTC Trust shares. Another disadvantage is the trading hours. Crypto Trading is a 24-hour market, whereas the traditional exchange with its fixed trading hours is not.

TIP: If you are looking for comprehensive trader training, you should take a closer look at our training courses. For those who have already gained initial experience but are looking for profitable signals, we recommend the PowerSignale stock round.

Coinbase as a trading platform for beginners

The easiest place to start crypto trading and buy, sell and store coins is Coinbase. However, you can currently only trade Bitcoin, Ethereum, Litecoin and Bitcoin Cash on this trading platform. If you are serious about trading Crypto currencies, you will choose another trading place like GDAX, Bittrex, Binance or Kraken from Coinbase for more offers and lower transaction costs.
Risks and opportunities by market capitalization

The crypto currency market made a very volatile start to 2018. You can make a fortune in one moment and lose it in the next, whether you trade Bitcoin, other coins or the GBTC Bitcoin Trust. Think about how you can minimize risks and protect yourself. You should also not make long-term investments with all your investable resources.

TIP: If you only trade the top currencies according to their market capitalization (currently these are the Bitcoin and Ethereum coins) or GBTC, then the risk of losing everything overnight is low. Not excluded, but still low. Other crypto currencies are much riskier, but can offer quick profits on a good day.

For those who would like to enter Crypto Trading in spite of the above hints:

  • A beginner should start Crypto Trading by choosing a company with a good reputation that offers an exchange and a digital wallet. This helps keep the process simple.
  • A beginner should also start trading coins with high market capitalization. Currently these are Bitcoin (BTC) and Ethereum (ETH). This may change in the future.
  • A good start for Crypto Trader is possible on Coinbase.com. This is currently the only platform that offers a wallet for Bitcoin, Ethereum, Litecoin and a currency exchange at the same time.
  • After you have completed the first trades on Coinbase, you can transfer your trading activities to GDAX and other exchanges such as Bittrex, Binance or Kraken.

TIP: A good first step into crypto trading is to buy a large crypto currency like Bitcoin. Then you will probably want to trade EUR or USD against coins on an exchange like the GDAX. Once you are familiar with it, you can try to exchange BTC and ETH for other crypto currencies and make a profit. Trading crypto pairs can be lucrative. However, this form of crypto trading is more complex and often riskier than buying a single crypto currency as an investment.

TIP: As a beginner, you should not engage in margin trading. Crypto currencies are very volatile. With margin trading, you risk losing everything in a single moment.

Finally, with crypto trading you also have to consider the tax consequences. Profits from trading transactions are taxable, losses can be offset. The tax authorities are also no exception when trading crypto currencies and insist on their profit shares.