Bitcoin Margin Trading
Everything you need to know about trading Bitcoin Derivatives
Chances are you have heard of Bitcoin, but what is Bitcoin Margin Trading?
Trading on margin usually involves trading derivatives, where your trading is based purely on price speculation. This means there is no need to physically own Bitcoin, you are simply trading on whether you think the price is going to go up or down. It’s like being able to buy shares without a stockbroker, gold without a dealer, or crypto without an exchange.
Note: You may also here margin trading referred to as contracts, perpetual contracts or spot contracts depending on the platform you are using.
Why Trade Bitcoin With Margin Trading?
Well, there are many advantages to trading Bitcoin derivatives as opposed to buying actual coins from an exchange.
Firstly, there’s the option to take sell positions without having to buy the Bitcoin first. Imagine Bitcoin is trading right up at $50,000 and the general market consensus says that at any moment, the price is going to fall. You can’t walk up to a crypto exchange and say, ‘Hey, I’d like to sell some Bitcoin at $50,000 so I can profit when it falls’. They will say, ‘Wait, what? You don’t have any Bitcoin to sell!’.
This is where a broker such as yours truly, CryptoAltum, comes in. They will say, ‘Sure thing! Just hit the Sell button on your platform instead of Buy and away you go!’
Now, this is a huge advantage in trading anything, but especially when it comes to cryptocurrencies. The traditional trading concept of crypto is to find that all elusive ICO that will launch with a tiny value and dramatically increase (just like the King, Bitcoin did!), making their owners very rich and happy. You’ve probably heard of the term ‘HODL’ when trading crypto, literally ‘HOLD ON FOR DEAR LIFE’. Buy and hold. Like, forever.
The ability to sell without owning first is opening up a whole new profit avenue for crypto traders. Instead of loosing funds on these lows, traders are now able to profit. Great, right?
Secondly and equally as important is Leverage. Leverage allows traders to enter the market with minimum capital while controlling a much larger position size.
Currently Bitcoin is trading around $45,000, so if you wanted to buy 1 Bitcoin, you’d need to put up $45,000 of capital first. For newbie traders just looking to dip their toes in the water, this may seem like a huge initial investment. Fear not, applying leverage reduces this to a much less scary amount. For example, say you have 1:100 leverage, your new capital requirement is just $450. CryptoAltum offers a massive 1:500 option, which means to buy or sell 1 Bitcoin you need just $90. Now we’re talking!
If you’re more of a high-risk, adrenaline-junkie, like-to-ride-on-the-wild-side kind of guy then you can also use leverage to maximise your profits by trading huge position sizes with small investment amounts. Why trade 1 Bitcoin when you could trade 5… right? In all seriousness, trading with high leverage is very risky so never trade with more than you can afford to lose.
So, use leverage to make your initial investment amount more manageable, or use leverage to explode your profits (or losses!) The choice is yours!
Side Note: If you do decide to implement a high-leverage, high-risk strategies, it’s really, and we mean really important to find a broker who offers negative balance protection, like CryptoAltum does. You don’t want to find that not only have you blown your account but you also owe your broker money. You want to ensure you have limited risk while having the potential for unlimited rewards.
Thirdly, let’s discuss pricing. If you go to Exchange A to purchase Bitcoin you’ll need to buy at the price they quote you, even if you notice that Exchange B is offering a much better price. With derivate trading however, the broker is receiving prices from multiple exchanges simultaneously, and publishing the best ones to their traders. This is exactly what CryptoAltum does. Our crypto pricing comes from over 10 of the top global exchanges with only the most competitive price being offered to clients.
Another huge reason to trade Bitcoin in this way is to take advantage of the sheer market volatility that cryptocurrencies present. To understand the scale of this, it’s best to look at some more widely traded products. Take gold or forex for example. These are considered volatile instruments, with average daily movements of 1-3% and 3-5% respectively. Other popular investments such as the Dow Jones and US Oil also have an average daily movement of around 3%. Bitcoin, on the other hand, doesn’t even raise any eyebrows when it moves over 10% in a day. Double the volatility means double the potential profits to those thrill-seeker traders out there.
Last, but certainly not least, when you trade with a cryptocurrency derivative platform, you will have the option to trade other instruments too. It’s likely that while you want to trade Bitcoin, you don’t want to trade only Bitcoin. It’s also very wise to not keep all your eggs in one basket. In finance, we call this diversifying your portfolio. CryptoAltum offers 16 other cryptocurrencies, forex, gold and oil so you can build a solid trading portfolio.
In a nutshell:
Do you want to trade Bitcoin without having the commitment of holding physical Bitcoins on an exchange?
Do you want to be able to profit not only when Bitcoin increases in value, but also when it falls?
Do you want to start trading with just a few hundred dollars but still be able hold decent position sizes?
Do you want the ability to trade other assets such as forex, gold and oil on the same platform?
Do you want the assurance that you are trading with the best broker who will be available 24/7 to support you?
‘Yes!!’ We hear you say. Excellent, start your trading journey and sign up with CryptoAltum now!
Reach out to our 24/7 support team via Live Chat or email us at [email protected].
Learning is Key!
If you want to learn more about cryptocurrency trading, we have some excellent resources in our Education Center.
Try our articles on Bitcoin CFD trading, or How to Trade Ethereum and Litecoin. Also, make sure you know exactly what you should be looking for in a Bitcoin and forex broker.
This website is not directed at any jurisdiction and is not intended for any use that would be contrary to local law or regulation.
CryptoAltum does not accept any clients under the age of 18.