A Margin Crypto Trading Guide for Beginners


If you are new to trading then margin crypto trading is one of the aspects you need to know about before you begin. This is a type of trading and a vast audience in the trading community opt for it.

However, as a new trader, you are required to learn as much as possible about margin trading before you opt for it. Margin trading is highly risky and has several aspects that traders need to be aware of to ensure that they are able to have a less stressful and safer trading experience.

Therefore, if you are interested in this type of trading but do not have any prior trading experience then you need to take time and gather some essential information. This is a brief guide for margin crypto trading for beginners that sheds light on all the major details of this type of trading.

What is Margin Crypto Trading?

Margin trading is also called leverage trading. This type of trading allows the traders to borrow funds from the brokers. The borrowed amount is called leverage and therefore, this type of trading is also referred to as trading with leverage.

The leverage a trader gets, enables them to open bigger trading positions. Now since the trading positions are bigger, they can also result in big profits or big losses. However, the profits are never guaranteed and the losses or profits depend on how the trade goes.

Therefore, if you are not careful while trading with leverage you can lose some or all of your funds.

How to Choose an Exchange for Margin Trading?

This guide for margin crypto trading for beginners addresses how one can opt for a suitable platform to trade with leverage.

It is a good practice for people to always opt for an exchange that prioritizes their security above all else. The crypto space is vast and is not safe from cyber threats and failures. This is why, it is crucial for new traders to choose an exchange that takes their security seriously.

While margin crypto trading, another major aspect they should keep in mind is to look at the leverage ratio offered by each exchange. Different platforms offer different leverage ratios, that are as low as 2x and as high as 125x.

Therefore, if you are new to crypto trading make sure you opt for a platform that offers the leverage ratio you want.

Types of Margin Trading

Margin crypto trading for beginners also requires them to know about details such as the different types of margin trading. As mentioned above, the more you know about this concept, the easier it can be for you trade with leverage.

The two types of margin trading are:

  • Cross margin trading
  • Isolated margin trading

Cross Margin Trading

Cross margin is a more suitable margin crypto trading mode for traders who are experienced and institutional-level. This is because this mode can be used as a hedging tool.

In this mode, all the balance available in an account is used as collateral to prevent liquidation of a trader’s position. If the traders choose a good amount of leverage their positions may not get liquidated, which is why this mode is used for hedging.

In other words, in cross margin mode the collateral is supported by the available balance in an account and is shared by all positions in that account.

Isolated Margin Trading

Learning about margin crypto trading for beginners also requires them to know about isolated margin trading. This mode is more suitable for new crypto traders who want to trade but want to minimize the potential losses they may face.

In isolated margin crypto trading, there is also a higher chance of facing liquidation, especially if high leverage is combined with high volatility. The margin a trader can place on their position in this mode is limited. In such a case, if the margin falls below the minimum level that is required then liquidation can occur. However, the benefit of isolated margin is that the loss a trader may face is only limited to the position where the margin is placed and it does not affect the overall account balance.

Top Platforms for Margin Trading

Margin crypto trading is a popular type of trading and is supported by several crypto trading platforms in the industry. However, some exchanges offer better services to the users, whereas others may not be so suitable for all kinds of traders.

Therefore, if you are looking to trade with leverage for the first time, then you need to know your possible options.

Here is a list of popular platforms for margin trading.

  • Bybit
  • Kraken
  • PrimeXBT
  • KuCoin
  • Phemex
  • Binance
  • BitMEX
  • eToro

Final Takeaways!

Margin crypto trading is a high-risk venture and requires the traders to be familiar with several aspects before they begin trading. Therefore, if you are new to the crypto space and trading then you need to know the details mentioned above first.


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