Crypto Academy Week 12 | homework post for @stream4u | crypto margin trading and crypto leveraged token trading | by @loveth01.

Image Source

Thanks to professor @stream4u for lecturing us this week on crypto margin trading and crypto leverage token trading.

CRYPTO MARGIN TRADING

Margin trading refers to the process in which funds are borrowed from a third party such as a bank or stock exchange to create an investment. Although your profit is compounded by trading on margin, it also multiplies your losses.
Crypto margin trading is a lending practice that requires traders to borrow money from other traders on a stock exchange or the exchange itself to gain greater exposure to a single asset.
Unlike regular trading where sellers use their own resources to fund trades, trading on margin allows traders to multiply the amount of money they are willing to sell. Margin trading is also called leveraged trading, for the most part.

THE WORKING PROCESS OF MARGIN TRADING

So, now that you know what margin trading is, you might be interested in how exactly the margin trading process works? Let's examine this further,

Margin trading functions sensibly easily on a important basis. A dealer gives the exchange some money in exchange for a lot of money to trade with and further sacrifices everything for the opportunity to make a big profit.

ADVANTAGES OF TRADING ON MARGIN

The most obvious benefit of margin trading is that due to the higher relative valuation of trading positions, it will result in higher earnings. Trading on margin can be useful for diversification because, with relatively small amounts of investment money, traders can open many positions.

Finally, with a margin account, it would be better for traders to open positions quickly without having to transfer large sums of capital to their accounts.

DISADVANTAGES OF TRADING ON MARGIN

It has the apparent disadvantage of increasing losses in the same way it can increase profits. Trading on margin, unlike regular spot trading, introduces the probability of losses that exceed a trader's original investment.

Only a small significant decrease in the market price will result in significant losses for traders, based on the amount of leverage involved in a trade.

PLANNING FOR TRADING IN CRYPTO MARGIN TRADING

Countless times, subject to the market, you will obtain a discount on your commissions. While the fees seem small at first peep (payee fee of 0.0075%), this sums up to a lot when you contemplate that this fee comprises the leveraged amount and not the actual funds in your account. For instance, if you have a 100X cross margin, you will pay 7.5% of the total amount.
The only time I endorse using the market is during stop losses. Use the stop market function when setting stop losses. The market travels so fast that at times, if you set a stop limit, it won't be filled.
Use the cross lever - I covered that above, but it's worth repeating. Most professional traders use this type of leverage because it helps protect against those crazy Bitmex fluctuations where you might have the right choice, however you get liquidated right before that main pump.

For example: if you have 1 BTC and you open a position worth 0.1 BTC, with normal leverage of 100x, your liquidation will be ~ $ 60 from your entry price. With Cross, you have .9 BTC as margin, meaning your liquidation would be around $ 600 from your entry.

You are risking your entire account balance with this type of margin; however it is worth it considering all the major fluctuations (especially Bitcoin). I recommend using a stop loss or, better yet, only funding your Bitmex account with amounts you are willing to lose ($ 200 - $ 1000).

CRYPTO EXCHANGES NAME THAT PROVIDES MARGIN TRADING

1 . BINANCE: offers a platform for trading of over 200 digital currencies. Presently, Binance permits customers to borrow funds in over 40 diverse cryptocurrencies.

2 . BYBIT: Bybit deal with only 4 trading pairs: BTC/USD, ETH/USD, XRP/USD, and EOS/USD, with changing leverages that is between 50x to 100x.

3 . BITMEX: BitMEX was established in 2014, and it is one of the most popular crypto margin trading exchanges in the world. Because of P2P model, the BitMEX platform permits customers to trade derivatives as an alternative to coins and trade futures and perpetual contracts

4 . POLONIEX: Presently, Poloniex’s highest leverage for margin trading is 2.5x and is among a minority of exchanges that permit customers to trade altcoins on leverage.

LEVERAGE TOKEN TRADING

Cryptocurrency exchange allows you to create anonymous accounts without providing your real name or information. To start trading on Bitmex, all you need to do is deposit Bitcoin to your account . No other currency is accepted as a deposit, so don't send Ethereum, Litecoin, Ripple, or any other altcoin for that matter. Deposits are fast enough, but this largely depends on how busy the Bitcoin miners are. I usually get my deposited funds within 15-30 minutes.
Keep in mind that Bitmex doesn't actually trade in Bitcoin , it does trade contracts. Contracts are an agreement to buy or sell an asset (in this case cryptocurrency) without actually owning the actual currency. After the withdrawal of the fund, the contract allocated for those funds is handed over to you and then the "real Bitcoin" is delivered to your destination address.

PLANNING FOR TRADING IN LEVERAGED TOKENS

If you are an experienced margin trader looking to bet on intra-day price pumps or declines, you can use leveraged tokens instead of taking "traditional" leverage positions on a digital asset exchange or using Contracts for Difference. They are easier to use and trade and provide a new way to trade cryptocurrencies. However, if you are not an experienced trader, you would probably be better off sticking to spot trading as the chance of losing money is much higher with leveraged tokens. As with all new technologies, things can go wrong and they usually do it at the worst possible time.

CRYPTO EXCHANGES NAME THAT PROVIDE LEVERAGED TOKENS SERVICE

1 . PRIME XBT: Offers up to 100x leverage on all accessible assets, like BTC, ETH, EOS, XRP, and LTC; Takes BTC, USD, EUR, and a wide variety of crypto’s.

2 . BITMEX: Offers up to 100x leverage on XBT (BTC), ETH 50x, LTC 33.3x, ADA 20x, BCH 20x, and XRP 20x, all assets are traded against Bitcoin.

3 . OKEX: Offers up to 5x leverage on BTC, ETH, EOS, ETC, and LTC, plus up to 3x on DASH, QTUM, BSV, and NEO;

4 . KRAKEN: Up to 5x leverage on BTC, ETH, XRP

5 . BITFINEX: Offers up to 3.3x leverage on selected major assets

BTC/USD PRICE FORCAST FOR MAY 10TH

Abstract price range for BTC/USD for May 10th is 43200.00 to 66000.00.
BTC/USD which is crossing a crucial juncture currently has support near the 51000.00 level. If BTC/USD breaches this mark the cryptocurrency might put in a test of lows demonstrated on the 23rd and 24th of April when it immersed to the 48000.00 ratio. If additional weakness were to develop investors can then believe the 45000.00 to 43000.00 junctures could come into play and be tested as support.
Since we have achieved a high of closely 64800.00 in the middle of April which was a success, but the setback lower since then has proven harsh. Still, if the 55000.00 price could be touched and withstand values above, traders officially could begin to target the 57000.00 resistance level. If this higher value that was traded last on the 19th April can be hit, it could set the table for investors who believe bullish momentum can be reinforced in full and that a test of the 60000.00 value is achievable.
The 61150.00 price has proven to be tough opposition in the past couple of weeks and if the mark can be penetrated higher then investors will set their visions on the 62000.00 and 64000.00 settings. If the value of BTC/USD can find continuous trading above the 60000.00 juncture for a long period of time, record highs will definitely be in the conversation again

In conclusion

anyone of the two you plan to venture into read well about it and choose wisely.

Thanks to professor @stream4u this is my homework post.

Cc : @stream4u