What is Bitcoin Leverage Trading?

What is Bitcoin Leverage Trading?

Leverages

Leverage trading is essentially like buying commodities on a loan from your broker. You need to put in around 50% of the trade, the rest of it is paid by the broker. In the case of CFD or margin trading, this ‘broker’ would be the platform itself. The Bitcoin leverage depends on the Margin that is available on the platform.

It will allow you to trade Bitcoin on a margin that you normally wouldn’t be able to. So the profit would be all yours, minus the capital that was borrowed. Therefore, it’s pretty useful to trade on margin since you can make higher trades. Higher margins give you better leverage. Think of it like this, the bigger the loan that the broker is ready to give you, the bigger your trade size can be.

Be aware that such trading can be risky since if the trade makes a loss, you will lose your initial investment. So make sure to read a lot about the currencies you want to invest in. Only margin trade after having accumulated a lot of experience.

You might have heard different terms used by day traders like CFD or Margin or Leverage, in this case. Bitcoin Leverage trading is an advantage that trading platforms offer if you want to make a quick buck. Bitcoin Leverage trading is essentially trading bitcoins on a platform using leverage.

Leverage trading lets you bet much more than the capital you have. That means you could invest $5000 in a $50,000 commodity. If the price of the commodity rises by 50%, your profit on an investment of $5000 would be $25000. If you didn’t use Bitcoin Leverage Trading, your profit would be around $2500.

So, you could make a much larger profit from much lesser funds in your account. Be careful, however, this brings on many risks as well. Beginner traders should always be very careful with trading in Bitcoin leverage.

On a regular platform, you would sign up and open a margin account. A margin account is different from a regular account since you need to register yourself and provide identification. This is a necessary step since the brokerage site needs to know who it’s lending money to. But be careful, if you open a margin account, you are liable for any losses or profits that might arise on the platform.

Potentially large profits

Using Leverage trading in Bitcoin, you can use the currency’s high volatility to your benefit. Since the currency shifts a lot in one day, one trade could make you $20. If you use Bitcoin Leverage trading, you’ll be able to magnify your trades and hopefully make a large profit. Since the volatility is high, you can use lower leverage for the same profit compared to other markets.

Using leverage, you could do trades worth over $20,000. That’s a large number but given the right Bitcoin leverage and right investment, you could also make $10,000 on such a trade in a few hours. Let’s take an example of margin trading on Bitcoin. Imagine you have $100. You decide to invest this into Bitcoin. For this trade, you use a bitcoin leverage of 10:1, which means that the larger trade is worth $1000. If the price of bitcoins goes up by 50%, the trade is worth $1500. You’d return your broker $900 and then get to keep $600. That’s a profit of $500 on an investment of $100. So, you understand how the idea of trading on a loan can help benefit you personally.

What’s the best solution?

The best solution to the question of whether to use margins on trades is a complex one. Firstly, you need to make sure that you have extensive experience understanding how the market works. Once you do, you need to understand risk management strategies. Risk management is pretty important because leveraged trades can result in large losses as well. These losses can also sometimes exceed your deposit, thus you’d owe money to the website. Nonetheless, the risk management tools are extensively detailed and integrated on some platforms.

What is the best platform to trade bitcoins with leverage?

CEX.IO

Simplicity

CEX.IO is one of the best platforms that provides margin trading and leveraged trades on bitcoins. The platform is very well designed and modern, it’s easy to use most of all. On the front page, CEO.IX has “Bitcoin Exchange You Can Trust” and I think that it sums up CEO.IX perfectly.

The platform also makes sure that during a transaction, if the market worsens or rises, you do not lose your money. This is a risk management technique that can be used whilst trading on Bitcoin leverage as well. I think that’s what makes CEO.IX stand out, the attention to consumer satisfaction is unparalleled in the industry.

Security

Since email accounts are quite easy to hack, it’s pretty easy to just hack your account and transfer all your bitcoins to another. The website helps you prevent this through the 2-factor authentication.

A 2-factor authentication is essentially like giving your bank a phone number so that when you need to verify a transaction, the bank sends you a text with the verification code. It’s as simple as that and prevents most hacking.

In the unlikely event that you actually are hacked, the platform freezes your account and resets all passwords for you. The CEX.IO team then investigates the situation further. The team is pretty helpful in a case like this, so you can rest assured!

The security is quite modern since they recommend you to use a third-party card manager in order to make sure that you can pay quickly whilst remaining completely protected.  

Deposits

You can deposit money into your basic free account or choose to fill your account with any crypto currency! That basically allows you to exchange your currency to bitcoins or ethereum, whichever you prefer. The website also accepts credit card payments, wire and SEPA transfers, which a lot of exchanges don’t.

In order to deposit money into your account to buy bitcoins, you don’t need to go through the identification process. However, if you sell bitcoins on the website and would like to withdraw your funds higher than $10,000 per month, you need to go through the identification process.

Conclusion

We at WikiCrypto recommend CEX.IO as the premier platform for Bitcoin leverage trading, it’s a versatile website that has been exceptionally successful in the cryptocurrency world. Since the inception of CEX.IO, the platform has seen many developments but has always been at the forefront of consumer satisfaction.

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About Article Author

Michael Serrano
Michael Serrano

Michael is an engineer and a bitcoin evangelist. He has been involved in cryptocurrencies since 2013. His biggest wish? 1 billion users of bitcoin, ether and litecoin by 2020. In the last 10 years he has worked for various early-stage start-up as a back-end developer.

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