The volatile world of crypto can generate significant profits for those with the skills and willingness to invest and trade. Crypto margin trading has continued to grow in popularity as a methodology for big returns. Read on to find out more about this exciting trading sector, and how you can get involved.
Understanding Margin Trading
In essence, margin trading is the process of using a smaller investment to generate larger returns. This is done through careful analysis of the market, and the utilisation of third-party funds known as the margin.
While this method can lead to great returns, it can also lead to terrible losses. This occurs when the worth of cryptocurrency moves in the wrong direction.
The volatility of the cryptocurrency market means trading in this way can be a risky proposition. Traders and investors need to tread carefully and act fast in order to assess the market and act accordingly to safeguard their investment.
When traders anticipate a rise in the cost of their crypto assets, it is referred to as ‘Long’ returns. ‘Short’ returns, meanwhile, refer to bets which are placed when the price of an asset is already in freefall.
Getting margin trading right largely relies on the trader accurately predicting the direction of prices for each asset.
How to Margin Trade Safely?
We advise starting your crypto margin trading at a low price point, to learn the ropes before making a larger investment. This initial sum can then be increased over time as your confidence and abilities grow. However, margin trading will always present a significant risk, especially when compared to other trading options.
Investing too heavily at the outset is a mistake many traders make, leading them to lose the profits they could have gained.
Many platforms have recently begun restricting access to margin trading through their portals. This aspect should help emphasize how important it is to fully understand the risks and rewards of trading in this way.
Risks with crypto are higher than with other asset classes, which is something all traders should understand.
Ready to Start Trading?
At IQDAX, we provide you with instant access to the major digital financial markets. This enables our clients to trade in crypto, Forex, commodities and stocks with just a few clicks, and all from the same account. To get started, head for the official website.