So if the broker requires 2% margin to open a leverage trade, you need to have 2% of the trade size to open the position. If you want to open a $50, worth of bitcoin position and the margin required by the broker is 2%, you need to have at least $1, in your account. Aug 24, · In , the popularity of leverage trading (aka margin trading) has grown considerably in Bitcoin and Cryptocurrency markets. This trend can be seen with the comparable growth of the trading. Margin in the leverage trading is referred to as the amount limit that you put down on the Bitcoin leverage trading. So, if the broker needs 2% of the total capital to open a leverage trade, then you need to have at least 2% of the total capital in the account to open the trade. For instance, if you want to open a leveraged trade of $, and the margin value of the broker is 2%, then the minimum .
How to trade bitcoin leverageHow To Trade Bitcoin With Leverage on Binance Futures | CoinCodex
Apart from allowing you to take on much larger exposure than your trading account should ordinarily allow, leverage magnifies your profits. Trading with leverage is perfectly legal, and many will argue that it is an excellent way to use your investment capital. Leverage also allows you to compete in the market effectively using small start-up capital.
Bitcoin leverage trading refers to trading bitcoin CFDs and taking advantage of the leverage offered by brokers. Although you do not own any bitcoins, you can still make a significant profit by using leverage to bet on the next direction of BTC price.
Many brokers offer different levels of leverage for bitcoin leverage trading. You can expect to get anything from to , but you need to read the fine print to be absolutely sure before you choose a broker. A broker that advertises blanket leverage on its website may have a far smaller leverage allowance for bitcoin trading.
Finding opportunities in their rising value OR their drop with trading Crypto derivatives - contracts that track their change in value CFDs! Bitcoin leverage trading allows you to control more sizable positions and make more profits. In many cases, you can control 10 to 20 times the amount required to open the position. The amount put down to open a trade in bitcoin leverage trading is known as margin.
This is unleveraged bitcoin trading and can also happen in the CFD space with a broker that does not offer any leverage on bitcoin trading. This is leveraged bitcoin trading. Bitcoin leverage trading allows you to accomplish a lot more with less. However, it is important to note that the reverse is also the case when you enter a position, and it does not go in your favor.
Depending on the total amount in the trading account, this can lead to a margin call. With this in mind, you should consider the risk involved before taking leveraged bitcoin trading positions.
By simply reducing the position size for each position you take, you can reduce the leverage on your specific position. Jill, however, will breakeven once she wins a trade that returns 5. Leverage Used Per Position.
Value of Transaction. With our illustration above, you can see how leverage can hurt your trading account when it goes against you. So what should you do? In our example, Jack risked half his capital on a position. This is wrong. Regardless of the success rate of your trading strategy, every trade you open in forex trading can go against you. Bitcoin trading is worse because it can go against you VERY quickly. Therefore, you need to be like Jill or even better, by only risking a reasonable fraction that allows you to withstand a losing trade.
Additionally, huge losses like the one suffered by Jack above can trigger a wide range of emotional behaviors. Also known as stop-loss, this is the price level at which the broker is expected to close out a losing position for you. By having a fixed stop-loss, you know exactly how much money you are risking on any open trade.
The position of your stop loss should be determined by your trading strategy. At what point is your position invalidated? Unfortunately, standard stops are not always honored.
The broker will only close the trade at the best available price after reaching your stop. During extreme volatility, the best available price can be hundreds of pips away from your chosen stop.
This is another reason why you should risk very little per trade. Guaranteed stops do the same thing as the conventional stops with an added twist. Regardless of what happens, the broker will close your position at your designated stop loss. This means high volatility or weekend gaps will not affect your positions. Depending on the broker you have chosen, you can get anything from to leverage. However, as a beginner, you should not get swayed by these figures. Low leverage brokers make it harder for you to take on excessive risk.
For bitcoin leverage trading, do not use more than leverage. For other less volatile instruments, you can go as high as Remember, it is not compulsory to use the full leverage advertised by the broker. By varying your trade sizes appropriately like Jill in our example , you can still trade with leverage even when a broker offers leverage.
The best leverage for you is your decision. When you settle for a leverage level, find a broker that gives you the flexibility to trade at that level. You can check out this tutorial from Binance to understand how different types of stop orders work and how they can prevent unnecessary losses. In the picture below, you can see an example of an order that has been filled successfully. This position is worth 0. On the right side of the tab, the position can be closed with either a market order or limit order.
While it may be hard to wrap your head around Bitcoin leverage trading at the start, this guide has hopefully made the process a bit easier to understand. Thanks to the user-friendly interface, trading Bitcoin with leverage on the Binance digital asset exchange is relatively simple.
Trade on Binance Futures. Of course, Binance is not the only cryptocurrency exchange that offers leveraged cryptocurrency trading.
Create a Binance account First things first - you will need to open an account on the Binance cryptocurrency exchange. We recommend to start with a small amount until you get comfortable with the user interface. Here, you can select the contract you want to trade. This slider goes from 1x to x. Higher leverage means higher potential profits, but also a higher chance of losses. Here, you can place an order. You can either go long you will profit if the price increases or short you will profit if the price falls.
You can choose between market order, limit order, stop limit order and stop market order. Here, you can monitor the status of your position after your order is filled. Pay special attention to the Liq. Price - if the price of Bitcoin reaches this level liquidation price , you will lose your entire position!