Why should I trade with Binance Margin?
Transfer, borrow, trade, repay, the Isolated & Cross way!
Introduction of Margin Trading in Cryptocurrency World
Margin trading is the fusion of spot and futures trading, as it lets investors trade cryptocurrencies via leverage. Just as is with the spot trading, margin trading also results in instant cryptocurrency ownership exchange. Margin trading still differs from other trading types, in that it uses leverage in trades that boosts the trade value in the range of 2X to 10X. Margin trading uses leveraged funds, wherein traders invest collateral (or margin) to select the leverage of their choice to trade (2x, 20x, etc.).
Margin trading involves trading assets via third party funds. Margin accounts offer traders access to higher sums of capital, facilitating position leveraging. Margin trading amplifies trading outcomes, traders can reap higher profit levels on winning trades. This trading results’ amplification makes Margin trading alluring in low-volatility markets (or the international Forex market).
Margin trading, in the Cryptoverse (for cryptocurrency trading), is offered by traders reaping interest as per the Margin funds’ market demand. A couple of cryptocurrency exchanges (CEXs) also tend to offer Margin funds. Traders utilize leverage trading in cryptocurrency markets to boost profits. Margin trading is a form of leverage trading in the Cryptoverse. It involves offering assets as collateral to gain purchasing power.
Margin trading lets you access premium trading pairs (such as BTC and ETH). With it, traders can place trades that revolve around the performance of the two trading pairs. Margin trading allows multiple assets as collateral for leverage trading. If there is volatility in the funding rates, margin trading offers avenues to arbitrage in the futures markets.
Professional traders can borrow funds for investing in margin trading on Binance Margin. If elevating your trading profits is on your agenda, leveraging on margin trading is the answer. In this article, you will learn exactly how Binance Margin can boost your portfolio.
But that doesn’t mean you can simply set and forget a margin leverage trade. You still need to be vigilant towards the cryptocurrency market sentiment. If your margin trade goes awry, your leverage may eat up your capital instantly. If that’s the case, the CEX would release a margin call, wherein the trader would either reduce their position or add collateral. By reducing the exposure notionally, the trader can decrease the leverage of their position. Or else, the trader would add enough margin to the trade to signal fund sufficiency for trade management.
A strong use case of margin trading is in portfolio (or asset) hedging. Hedging allows traders to set fresh positions that correlate negatively with ongoing positions. Hedging lets traders and investors insure against their possible losses. But don’t forget to use stop-limit orders in margin trading, to contain losses.
Why is Binance Margin good for you?
- Diverse trading pairs: Over 600+ trading pairs are available in Binance Margin trading a variety of cryptocurrencies (such as BTC, ETH, BNB, USDT, etc.). Traders also enjoy the best trading fees and transaction rates, plus quality service.
- Multi-asset collateral: Margin trading lets users invest multiple assets as collateral for borrowing leverage, via the cross margin mode. What this trading style does is it goes beyond merely investing BTC in a BTC margin trade. With it, investors can invest their BTC paired with ETH, or BUSD, USDT, etc. against their collateral denomination. This multiple asset collateral investing lets traders operate flexibly in opening trades.
- Cooling-off period: The cooling-off period function assists users in controlling their urge to trade. It suspends margin trading temporarily for a particular period via turning on the Cooling-off Period function. Binance limits unreasonably compulsive trading behavior, whilst instilling responsibility in trading.
- Insurance fund: Binance Margin’s insurance fund safeguards user accounts when their assets (minus liabilities) falls below 0. It also covers instances when the user can’t repay debts owing to lacking funds.
- Responsible trading: Binance’s responsible trading policy lets you responsibly have enough control of your transactions and trade. Binance preaches its users to practice self-discipline, regularly educate (Binance Academy, Binance Research, Binance Blog, FAQ Guides), and protect capital.
Examples / Cases of using Binance Margin
Simply put, you wish to buy BTC worth $2000, but you only have a cryptocurrency spending (budget) provision of $1000. In this case, you can use margin trading to fulfill your cryptocurrency investment portfolio objectives. You can also use margin trading if you intend to hedge against an asset or a portfolio.
What’s your Binance Margin Trading plan?
Margin trading introduces traders to the avenues available beyond traditional trading. Margin trading done with a precise objective and due attention is a fun and profitable experience. It’s advised that margin trading should be executed only by traders having enough experience. Traders should consciously comprehend the inherent risks in margin trading. Vital tools, such as stop-orders, must be used wisely as and when possible. If you’re sure enough about your knack of cryptocurrency trading, delve into Binance Margin Trading today.
Learn more with Binance Margin Trading Guide.
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Disclaimer: This article is meant for educational purposes only and should not be construed as an investment advice.