Margin Trading: The Pain and the Pleasure

The first Steps to Trade Cryptocurrencies Like a Pro

There are many cryptocurrency exchanges where you can buy, sell and trade cryptocurrencies. Regarding this matter, what makes a good exchange?

First thing to consider when looking for a good exchange is how safe and secure it is. Second, how trustworthy it is. Also, cryptocurrencies pairs availability are of great importance. Increasingly, many exchanges offer a wide range of cryptocurrencies that can be traded against both other cryptocurrencies and fiat money. It is also favorable to trade on exchanges that charge low trading fees. In like manner, traders have eyes for margin trading . However, still many traders don’t really have a clear idea about margin trading term and use. Here is a good starting point:

What is margin trading for cryptocurrency?

Margin trading is the process of using borrowed funds from an exchange to trade a digital asset. Such use is a way to amplify profits when trading. Margin trading is also known as leverage for cryptocurrencies or simply leveraged trading. It is mainly pre-used by traditional financial markets.

How does margin trading work?

Let’s say, you invested $100 for BTC/ USD pair at 2x leverage or two times leverage.

Now, let’s suppose that you went long or in simple words you ordered buy. Thus, when the price goes up by 50% your gain will be multiplied by 2. In other words your profit is $100 instead of $50 (the case if you were using your own funds).

Likewise, it is important to mention that margin trading is a double-edged sword as it is both risky and rewarding. Borrowed funds/ loan which can amplify your gains, can amplify your losses in the same manner. Here is how: Let’s say, you invested $100 for the same pair BTC/USD at 2x leverage or two times leverage and let’s suppose again that you opened a long position on that pair. Now, if the trading pair price drops down,  your loss is amplified to 2 times. Hence, your loss is $100 and you are left with $0.

Here is another way to explain margin trading: Let’s say you invested $100 for BTC/ USD pair at 2x leverage which means that you will trade with your $100 and with another $100 from the exchange. So, in total you have $200. Accordingly, if you go long (buy) and price goes up by 50%, your profit is $100. And what if price goes down? Then your loss is $100 and you are left with only $100 that you have to pay it back to the exchange. As a deduction your account is left empty. 

What exchanges support margin trading?

It is nearly rare to find an exchange that offer margin trading. In fact, among hundreds of cryptocurrency exchanges, there are only a handful of them like BitMex, Bitfinex, Poloniex, Kraken and Huobi Pro exchanges that offer this feature.

Huobi Pro as a leading exchange to support margin trading:

On this subject, I will refer to Huobi Pro as one of the most professional exchanges to support margin trading. The crypto to crypto exchange provides its users with a structured tutorial on how to margin trade. To start the trading adventure with Huobi Pro at margin trading, you need first to have a margin account which is separate from regular account. In like manner obviously, you need to loan fund then you trade and finally you repay the interest.

Huobi Pro is often recommended thanks to how easy it is to use. It offers a user-friendly interface. Traders can browse easily the platform as you can see below.

After logging into Huobi Pro, click on the “MARGIN” button:

margin trading

All the available trading pairs are on the left, as it is mentioned.

The guide with captions is an inviting one as it makes easy to traders to understand the process.

You can illustrate the Margin Trading Tutorial using this link:

Another readable source link that traders may find on Huobi Pro Help Center is Margin Trading Instruction. That article is advantageous in a way that it explains with detailed examples how you can increase profit and how to avoid high risks as well.

You can explore using this link:

Aware of how Margin trading can be risky, Huobi Pro sets Margin Call warning. When the risk rate of a Margin Account reaches 120%, the exchange will notify users via SMS and email.

Huobi Pro answers perfectly the question of what makes a good exchange. The chinese-based exchange sits in the top 3 largest exchanges by trading volume. It has captured the attention of many traders because it delivers advanced trading features.Moreover, being a crypto-to-crypto exchange, Huobi pro makes available more than 190 cryptocurrencies. The platform provides its users with trustworthy and enjoyable trading experience.  

margin trading





Meryam Taghouti

She is a BBA graduate from Tunis Business School, Her passion for the Blockchain Technology and cryptocurrencies has led her to research and write about the crypto world.

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