Anyone with interest in the field of stock market investing has come across references to the concept of margin trading or leveraged trading. But what is it, and why do we need it? We will explain in our article:

  • What is Bitcoin leverage trading?
  • How to choose a Bitcoin trading platform with leverage?
  • And how to start margin trading in Qatar?
Bitcoin trading platform
Bitcoin trading platform

What is margin trading?

Bitcoin leverage trading is the same as buying and selling crypto-assets to capitalise on price fluctuations (volatility).

However, in this case, the trader borrows an additional amount from the Bitcoin leverage trading platform of cryptocurrencies to increase the order volume. And, accordingly, this gives a chance to make a more substantial profit.

Leverage is not the same as a loan. The risk here is that your funds will go bust. It is a delusion to think that if your prediction does not work out and the position goes down in losses, you will be in debt to the exchange.

The leverage of the exchange essentially only increases the volume of the order. So in practice, your funds are rolled over, and in the event of a losing position, they go bust. But the moment an asset on order comes to an end, we notify you with a margin call, allowing you to add funds or close the position before it is too late.

For example, you have 10,000 USDT in your account. Your solution is to go long (buy for perspective) in Bitcoin, hoping that the asset's price will rise later and you can make a profit on the difference when you sell. With x5 leverage, you can buy bitcoin for 50,000 USDT rather than 10,000.

But the situation has changed, and the asset, on the contrary, has started to get cheaper. So when the exchange calculates that your 10,000 USDT is about to expire, it will notify you with a margin call (a message that the position is unprofitable). Or they can pull funds out of their margin account and then send a margin call (it depends on the type of leverage).

Nevertheless, if you are a lover of crypto and virtual reality, and want to combine this love with earning, then Bitcoin trading with leverage is one of the best known options. 

How to trade on margin correctly?

Let us provide you with some valuable tips to help you with your Bitcoin leverage trading in Qatar. 

Trading on margin helps you to increase your return on investment. It does not matter whether the market is going down or up. An investor gets the opportunity to make more extensive operations and transactions than he could do with his funds. Consequently, one can earn more money.

When using this tool, some risks must be considered. For example, to avoid a margin call and forced the closing of positions, you need to follow some simple rules:

  • It is always important to monitor the market situation and control the sufficiency of the account balance to cover trades and positions.
  • If a position is losing, you will want to exit it.
  • If the market situation is unfavourable, you may receive a message from your broker - you should respond to it promptly.
  • Do not forget to put a stop-loss.
Operate Bitcoins with leverage
Operate Bitcoins with leverage

When margin trading is used?

It is effortless to start investing on the stock exchange today - a brokerage account can be opened online, and many stocks, derivatives or currencies do not require large sums of money to purchase. But it's also challenging to make a significant profit with a minimal investment.

If you buy one cryptocurrency for a thousand dollars, which goes up in value by 50%, you will get a $500 profit. It all looks good on a percentage basis, but in reality, there won't be much money at all.

To get around this situation with a small number of initial assets, so-called leverage is used. The idea is that the investor will receive a loan from the Bitcoin leverage trading platform to invest. The client must leave the pledge for securing the credit, which may be equities, currencies and other assets.

As a result, traders can make transactions in stocks, currencies, derivatives (futures, etc.) without physically owning them or without depositing the total amount of money needed for the purchase.

Nuances of margin trading

It is worth paying attention to some peculiarities of Bitcoin trading with leverage, which usually causes many questions for beginner investors.

  • A margin deal can be opened on any amount without necessarily using the whole possibility to spread a deal with the maximum possible leverage; you can use only a part of the leverage, and the minimum level of leverage is not limited in any way. In this case, the investor's funds will be used first, and only if his funds are not enough the transaction will be partially financed by borrowed funds from the Bitcoin trading platform with leverage.
  • It is possible, in principle, for any investor to give up the potential opportunity to make margin transactions. This can be done with a broker by asking, from a purely technical point of view, to cancel the possibility of margin lending simply by disabling access to leverage in the exchange terminal.
  • Even without the ability to make margin trades, investors may be confronted with a "technical" level of margin. As a rule, it happens when the investor has no free money balance on his account, and the broker charges him a commission. 

In this case, small leverage is automatically applied to the amount of brokerage commission, and the commission is reflected as a minus in the investor's account cash balance. Therefore, there is no need to be frightened because the amount of commission is minimal, and such leverage cannot significantly affect the level of profit on the account or significantly increase the cost of the commission.

Margin trading at Bitcoins
Margin trading at Bitcoins

What is a Stop Loss in trading?

In the market, almost no trader has a chance to trade profitably if he does not correctly manage his risks and capital. Luckily, Stop-Loss orders can help you do just that.

With Stop-Loss orders, traders can protect their trade and their trading decisions from excessive losses and take away negative emotions like fear and greed.

Setting a stop-loss is one of the main prerequisites for successful trading. Whether a beginner or a professional trader, you need to know what a stop loss is.

A stop loss is a way to limit losses in managing an open trading position or a portfolio of positions. Stop-loss is an order to close a position in case of an unfavorable price movement.

A trader sets a stop loss to limit his own failures and to trade within his own money management rules.

Bitcoin trading with leverage
Bitcoin trading with leverage

Types of stop-loss

There are different types of stop-loss orders:

Depending on whether the broker guarantees the level of execution:

  • Guaranteed stop loss.
  • Unguaranteed stop loss.

A guaranteed stop loss is an order in which the broker guarantees the level of execution of the order. Such orders usually pay because if the first price available in the market exceeds your stop-loss price, your broker will pay you the difference between the stop loss level you set and the price at which the order is executed in the market. It works like insurance.

An unsecured stop loss is an order to close a position that may not match the level set by the trader. Usually, the broker seeks to close the position at the level the trader has chosen. The broker can find a counterparty for the trader's trade in advance. However, high market volatility or lack of market liquidity can create situations where a stop-loss trade may be closed at a different price.

It is also worth mentioning that stop-loss plays a role beyond just preventing and limiting losses. Stop losses are also an opportunity to protect profits.

An example is a trailing stop that can be used to take profits. Conversely, a trailing stop loss is a stop loss that follows the price of a trading instrument in real-time.

The trailing stop will follow the price of the trading instrument in real-time and will stop if the market moves in the opposite direction to your trade: for a long position, the trailing stop goes up when the price rises and stops when it is falling.

If the price reaches the maximum stop loss level that has been set by the trailing stop or by you, the position is automatically closed.

For a short position, the trailing stop follows the downwards trend and stops when the price rises.

Bitcoin Leverage Trading platform
Bitcoin Leverage Trading platform

How to Start Bitcoins trading with leverage?

Trading with leverage is popular among professional traders. We have already discussed their rules to avoid losing money by increasing their order volume. But how do you start trading on margin? 

For starters, register on the Bitcoin trading platform with leverage. Registration is fast and effortless. Next, you need to get verified. This process is required to verify your identity to keep your personal details secure and your funds safe. 

You will need a brokerage account to invest, which you can open online. You can learn the trading software and practice your trades using a demo account with virtual money. Be sure to take advantage of this great opportunity. 

We wish you good luck in trading. Believe in what you can do, and don't stop learning and trying to make money. You will do great!

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