If you have some trading history in forex, then there is a high likelihood that you have used margin trading. However, for those that might be new to trading especially in the cryptocurrency realm, the same principles used in forex usually apply in cryptocurrency trading.
Margin trading is a concept that many traders use to try and maximize their profit-earning potential. It can best be described as the option that a trader may be presented with to select a trade size that is larger than the amount that the trader has in their account. Margin trading in the cryptocurrency would therefore be a situation where the trader wants to trade a cryptocurrency pair but then the exchange they use lends them some extra cash. They add this extra cash to their existing amount to enter bigger trade positions.
Margin trading example
Picture a scenario where a trader has $500 in his trading account. While analyzing the cryptocurrency market, he notices some market trends that will likely influence a rally in the price of Bitcoin. The trader therefore decides to trade on a Bitcoin-based currency pair such as BTC/ETH but then decides to borrow an extra 500 so that he can double his position. The extra cash loaned to the trader by the exchange is called leverage.
In the above example, the trader will stake $500 but the value that will be executed will be $1,000. This means that the leverage ratio will be 2:1. Trading platforms usually provide different margin levels and it is upon traders to choose which one they want. Keep in mind that margin is a double-edged sword. You will end up multiplying your profits if the markets are in your favor but it the opposite happens, then you end up losing more.
How to start margin trading on cryptocurrencies
You can start trading margins on cryptocurrencies by joining a cryptocurrency exchange. Alternatively, you can join a platform such as TrailingCrypto which has a section that allows you to choose your preferred crypto exchange from within its interface. It therefore offers the convenience of not having to create different accounts if you wish to switch from one cryptocurrency exchange to another.
You can create a Bittrex account on their website by filling the registration form which requires you to provide some of your personal details such as your name, email address and country of residence among others. Once you create the account, then you will have access to the crypto trading platform. You can also access Bittrex through TrailingCrypto.
Unfortunately, if you are a Bittrex trader, you will not be able to trade margins because the platform does not offer margin trading on cryptocurrencies. However, there has been talk of margin trading being available on the platform in the future. This will likely be something that cryptocurrency trading platforms will put into consideration especially now that the cryptocurrency market is evolving and expanding as awareness grows. Traders want to take advantage of opportunities available in the market and exchanges like Bittrex will likely introduce features like margin trading to meet trader requirements.