Is Trading Bitcoin with Margins and Leverage Safe?

Margin trading with leverage increases the amount invested without having to actually hold the crypto-assets. The margin is a kind of loan that enables traders to enter much bigger trades by leveraging the funds borrowed.

The margin is the percent of the traders money actually that went into placing a position. For example, on an advanced trading platform like PrimeXBT, if a trader placed a $1 position it becomes as strong as a $100 position with a 1% margin at 1:100 leverage.

In other words a $100 profit becomes $10,000 ($100 x 100).

But is it safe?

Leverage can be your Best and Worst Friend

Obviously leverage is GREAT when you’re winning, but not so great if you’re losing. One must consider that with 100X profit also means there is the chance for 100X losses.

For this reason not many crypto trading platforms allow for much more than 10X leverage, with only a handful of providers that offer up to 100X.

Margin trading is a technique that has been used in traditional markets for many years, and while there’s no denying that there is an increased risk, this risk can be managed. This is why the technique has proven to be undyingly popular and highly rewarding when used sensibly.

Fortunately, in accordance with the crypto markets adoption of these advanced techniques, also comes the adoption of the appropriate risk management techniques by responsible trading platforms.

Prime XBT is one such new-era cryptocurrency trading platform that arises from decades of the teams experience in forex and equity markets and thorough testing of existing exchanges. Alongside the platform’s advanced trading possibilities, it also allows for the befitting risk management tools and techniques that minimize the risk of trading with high leverage.

Risk Management

• Stop-Loss Limits: First and foremost, knowing full well that market prices can go against you at any given moment, it’s important to set a stop-loss limit in advance. Take into account the amount you are willing to risk could be lost completely. In doing so, you eliminate mistakes made due to indecision when under pressure in the heat of the moment.
  Stop-loss limits are crucial to day trading, as swing traders can often ride out mini price slumps.

• Asset Allocation: Diversify your portfolio by spreading your assets among different cryptocurrencies. This way, your funds are protected from dropping all at once as opposed to putting your eggs all in one basket.

Even with risk management precautions in place it is of course important to be constantly educating yourself and conducting technical price analysis in order to know your entry and exit points. This is done by analysing the recent trade activity of the crypto-assets you’re interested in trading. You can follow the Prime XBT Twitter account to learn more about this.

Furthermore, it is widely advised to trade well known coins as opposed to the less known and/or obscure coins to reduce your risk of loss. While they may be cheaper, they also see less price movement and with low liquidity it’s difficult to fulfil orders when buying or selling - not to mention they are much harder to predict.

Gaining From Market Fluctuations

Using the leverage offered by Prime XBT will help a trader to maximize profits both when markets are rising, and falling - with the ability to short crypto-assets.

To short sell is to bet against an assets price going up, as you expect it will go down. A trader can then borrow an amount from the platform, sell at a high price and buy back in at low price. That difference in price is the traders profit, which is then multiplied by the leverage.

All order types, such as stop-loss, limit orders, market orders and OCO (one-cancels-the-other) can be used on all position types so that loss potential can be minimized in alliance with leverage no matter the market trend.

Advanced Trading Platform Launching soon

Trade bitcoin, ethereum, litecoin, ripple, bitcoin cash and eos with instant execution and liquidity from 12 crypto exchanges in a highly sophisticated trading terminal. PrimeXBT promises the most advanced charting software, drawing tools and bank-grade technology - wrapped in a highly customizable and user friendly interface.

Due to launch by the end of Jan-2019. As an introductory offer, PrimeXBT is free for the first is month, with no commission or trading fees for early sign ups.