Leverage Trading in Crypto: 5 Best Platforms for Crypto Margin Trade
In this article, we compare and review the best exchanges to margin trade crypto. Leverage uses borrowed capital to trade cryptocurrencies, increasing your buying power and allowing you to trade with more capital than you might have. Bybit is a crypto derivatives-only exchange that offers some of the most innovative charting features and is a top 5 crypto derivatives exchange by volume. The platform supports trading inverse perpetual and Tether (USDT) perpetual futures contracts. Bybit’s ability to handle more trades per second than most legacy exchanges has quickly made it one of the most popular up-and-coming trading platforms. Well, it doesn’t differ much from other platforms that provide this service outside of the US.
- In terms of security, Stormgain utilizes a range of measures, including encryption, two-factor authentication, and cold wallet storage for client funds.
- The United States of America is one of the leading countries in the world in terms of crypto holdings.
- Stop-loss is a price level where a losing position closes automatically.
- Depending on the crypto exchange you trade on, you could borrow up to 100 times your account balance.
That said, crypto trading with leverage is far from a “get rich quick” scheme. It takes a lot of calculation, risk, and market experience to get it right – and even then, success is not always guaranteed. Leverage can multiply or decrease the outcome of a trade, so balance is key here – and mastering it isn’t something many traders can do in a day. Find out what is leverage trading crypto like – from how it’s used in the markets to managing the risks. Leverage trading allows traders to start with smaller initial capital but still be exposed to higher profits.
Best Crypto Leverage Trading Platform For USA in 2023
The platform uses a combination of cold storage, two-factor authentication, and encryption technology to protect users’ funds and personal data. BitMEX operates a maker-taker fee structure, which can work out to be relatively cost-effective for high-volume traders. While this is lower – than some newer platforms, it’s worth noting that this level of leverage still carries substantial risk and should be approached with caution. BitMEX offers up to 100x leverage on Bitcoin, and up to 50x on other selected cryptocurrencies like Ethereum, Litecoin, and Ripple.
In terms of the user interface, charting and trading on MEXC closely resemble OKX, KuCoin, and Huobi. Let’s assume in this case that you want to open a $10,000 short position on Bitcoin with 10x leverage. You borrow Bitcoin from someone else and then sell it at the current market price. Because you chose to trade on 10x leverage, you’ll have the chance to sell $10,000 worth of Bitcoin while only having a $1,000 collateral.
Leverage Short and long trading
It is equally important to know the liquidation price of your leveraged position. Although exchanges will always give you the liquidation price, it is good to know how it is calculated. Now that you understand why experienced traders may want to use leverage in crypto, let’s briefly see how you can use leverage in crypto to master this topic better. For example, if you want to trade $500 in BTC with 2x leverage, you must deposit minimum collateral of $250 in your account.
Centralized cryptocurrency exchanges that offer crypto trading with leverage, such as Binance, often offer leveraged tokens as a simplified trading method. Having these tokens lets you gain leveraged exposure to assets that you otherwise wouldn’t be able to trade. The availability of trading pairs that use leveraged tokens will also depend on your trading platform of choice. Cryptocurrency margin trading refers to the practise of borrowing funds from a broker or exchange. The borrowed money is used as collateral to increase the capital amount to trade a larger position size.
The Top Rated Leverage Trading Crypto Brokers
Investors can also take advantage of the platform’s copy trading feature to potentially make more profit from futures. KuCoin offers a wide range of cryptocurrencies for leverage trading, with up to 100x leverage on some assets. The platform also provides a range of advanced trading features, including stop-loss and take-profit orders, margin trading, and futures trading. In terms of security, KuCoin uses top-of-the-line security measures to ensure the safety of its users’ assets, including SSL encryption, multi-signature wallets, and 24/7 monitoring. OKEx offers a wide range of cryptocurrencies for leverage trading, with up to 100x leverage on some assets. In terms of security, OKEx uses top-of-the-line security measures to ensure the safety of its users’ assets, including SSL encryption, multi-signature wallets, and 24/7 monitoring.
- Kraken offers leverage up to 5x on a wide array of cryptocurrencies, including Bitcoin, Ethereum, and many others.
- In terms of security, Bybit uses top-of-the-line security measures to ensure the safety of its users’ assets, including SSL encryption, multi-signature wallets, and 24/7 monitoring.
- Before you can borrow funds and start trading with leverage, you need to deposit funds into your trading account.
- In general, it’s recommended that you trade around 1-2% of your overall portfolio value, and it’s advised not to exceed the 5% threshold.
Similar to Bybit, and Binance Futures, this platform has perpetual futures contracts without expiry dates. The benefit of the Futures exchange is there are two modes available for new traders and experts. You can avoid situations in which you could lose a significant percentage of your trading money by thoroughly planning out your position sizing. If you lose a significant percentage of your trading capital in one unsuccessful leveraged trade, you could be less motivated to practice discipline when managing the remaining funds.
So, before you jump in, you might also familiarize yourself with our selection of the top five best trading strategies. MEXC can be considered a worthwhile choice and alternative to the big-name margin platforms. However, MEXC is not available to use in the USA and the customer feedback on their experiences is average. Overall, OKX is a strong contender when looking for the best place to trade crypto with margin. While it lacks in the number of margin pairs to trade, it makes up for it in its excellent trading terminal that can be accessed on a mobile device for 24/7 trading.
- Huobi Global offers a variety of cryptocurrency markets that can be traded using the same user account.
- Margex is a cryptocurrencies exchange platform based in Seychelles, and it was founded in 2020.
- It involves a high level of risk, especially in the volatile cryptocurrency market.
- Some trading platforms even offer a risk-management strategy called negative balance protection.
- The broker will close your position at the designated stop loss regardless of what happens in the market.
- Unlike others in this list, Binance is one of the few that provides open interest data.
It would be best to never trade with more than you can afford to lose and always take profits. Leverage trading is a double-edged sword that can exponentially amplify both your gains and losses. It involves a high level of risk, especially in the volatile cryptocurrency market. As such, Binance encourages users to trade responsibly by taking accountability for their actions. Another reason traders use leverage is to enhance the liquidity of their capital. For instance, instead of holding a 2x leveraged position on a single exchange, they could use 4x leverage to maintain the same position size with lower collateral.
How to Manage the Risks of Leverage Trading
Gaining experience in predicting how much an asset is likely to move up or down and practicing using leverage increases your chances of successful trading. Always trade with caution and evaluate the risks before engaging in leverage trading. You should never trade funds you cannot afford to lose, especially when using leverage. Leverage allows you to get started on trading with a lower initial investment and the potential for higher profits. Still, leverage combined with market volatility could cause rapid liquidation, especially if you’re using 100x leverage. It also offers tools like an anti-addiction notice and the cooling-off period function to help users exercise control over their trades.
- Kraken- a US registered entity based out of San Francisco, USA, is one of the few US platforms that allow crypto leverage trading for USA investors and gives up to 5x leverage.
- The platform also uses Chainlink Oracles for dynamic pricing to aggregate prices from other high-volume exchanges.
- Centralized cryptocurrency exchanges that offer crypto trading with leverage, such as Binance, often offer leveraged tokens as a simplified trading method.
- BingX is a popular crypto social trading exchange launched back in 2018.
- The massive 2021 crypto bull run saw the price of Bitcoin jump from $30000 in January, to an all-time high of $ In June.
However, trading with leverage in this way is less accessible than regular spot trading, since it’s more regulated and is seen as riskier. Finally, since leverage trading is a risky business, I’ll offer you some tips and tricks that may help you keep your assets safe even when a trade goes south. Specifically, we’ll focus on how the process works on Binance and Kraken exchanges, especially when it comes to crypto leverage trading USA clients. For starters, we’ll define what crypto trading with leverage is and how it relates to the concept of margin trading. Then we’ll take a look at how leverage can be used in spot and derivatives markets. If you’d like some background knowledge before you take a deep dive into leverage, you can find our guides on how spot trading works and what margin trading is.
How to trade crypto with leverage
In general, it’s recommended that you trade around 1-2% of your overall portfolio value, and it’s advised not to exceed the 5% threshold. Keep in mind that if a position doesn’t go your way, you might get a margin call. So, to avoid forced liquidation, keep some assets to the side to cover the potential crypto ai trading bot losses. Just as you can trade assets like Bitcoin, Ethereum, or Tether, you can also spot strange names in the market like 3X Short Ethereum – now you know what they are. Let’s take a look at one of the most unique inventions in terms of what is leverage trading in crypto – leveraged tokens.
- It’s the most straightforward method of trading that’s offered by virtually all centralized cryptocurrency exchanges.
- However, if Bitcoin increases by 20% to $48,000, you would need an additional $2,000 to buy back the 0.25 Bitcoin.
- For this reason, it is better to keep a separate account for leveraged trading by allocating a certain amount of your capital to it.
Margin trading permits you to borrow money and trade more significant amounts than you would be able to if you only use your funds. On the contrary, margin trading also increases the risk of losing all of your money or being liquidated. As mentioned, traders use leverage to increase their position size and potential profits. But as illustrated by the examples above, leverage trading could also lead to significantly greater losses.
Bybit – A Premier Leverage Trading Platform
Setting fixed stop-loss lets you know the amount you risk losing if the trade fails. Ideally, you should set stops at a point where the trading position becomes invalidated. By using leveraged products, you can profit from both rising and falling markets, that is the ability known – as shorting. When trading with leverage, you can speculate product price movements which then inform your decision to either buy or sell. If you buy an asset because you believe the price would rise, this is termed ‘going long’ and when you sell it is called ‘going short’.
- Other than the collateral, exchanges also require leverage traders to maintain sufficient margin for their trades.
- Similar to momentum trading, leverage trading also allows you to profit more quickly from short-term price fluctuations thanks to your greater flexibility.
- As such, if you open a long position on ETH for $2,000 with a 2x leverage, you simply need to deposit collateral of $1,000.
- Reading through various best crypto exchange reviews online, you’re bound to notice that one of the things that most of these exchanges have in common is that they are very simple to use.
The flat rate of 0.5% is also quite high when compared to Bybit and Binance Futures. The benefit of using Huobi for crypto margin trading is the ability to access other features, products, and services on the same exchange such as staking and earning interest on cryptocurrencies. Funds can be seamlessly transferred between wallets to take advantage of other services in between margin trading. Leverage trading in crypto starts with funding your trading account, and the initial capital you provide is called collateral.
Leverage Trading in Crypto: 5 Best Platforms for Crypto Margin Trade
Essentially, leverage enables you to trade at a bigger capacity with minimal resources, maximizing returns. Yes, leveraged trading carries substantial risk, especially for new traders. If used wisely, leverage can be a useful tool to increase your profits. Cryptocurrency markets themselves are risky, but margin trading on crypto exchanges is even more dangerous. The platform provides leverage up to 10x for various cryptocurrencies, including Bitcoin, Ethereum, and others. Although the maximum leverage may not be as high as some other platforms, it can be ideal for traders seeking a balance between potential returns and risk.
Overall, Kraken is a reputable option for qualified margin traders, however, margin and futures markets are restricted to US-qualified traders only which is a downside for international users. While the fees are competitive, there are better exchanges that have a larger selection of trading pairs. In total, there are currently 36 cryptocurrencies that can be traded with margin which include Bitcoin, Ethereum, Cardano, Solana, Compound and many others. This is a reasonable selection of coins that comprises the most popular assets by market capitalization and emerging DeFi tokens.