Crypto Margin Trading
Margin trading is considered very risky. When crypto has involved this type of trading is even more dangerous. The following tips have been chosen and combined to a list before starting your first crypto margin trading. So you have heard a lot of hype about the highly profitable world of margin trading.
7 Crypto Margin Trading Tips for Beginners
It is more important to start with small amounts of capital that you can afford to lose in the beginning stages. This way you can gain confidence and experiment with the different types of strategies and focus on learning how to trade and trying to maximize your returns.
Practice with the low levels of leverage to get used to how crypto margin trading works. Once you get good experienced, you can start slowly to add in more funds and repeat the trading strategies you have used that have proven to be successful.
2. Understand the Interest Rates
All loans carry an interest rate for what is borrowed or fees. However, there is a difference in rates between crypto exchanges. Being educated about interest rate gives you a good chance of succeeding as an investor. Understanding a trading strategy without understanding the interest rate calculations could even lead to losing money despite the profiting trade.
3. Use a Stop Loss
Stop losses are the risk management tool in crypto margin trading. They can help you to prevent the significant losses when trades go in the wrong direction. Place your stop losses with care; if it is too close to purchasing price, you may get stopped out before the market has an opportunity to go in your favor, and if it is far away, you open yourself up to incurring more significant losses than trade may be worth.
Click on Below Video: CryptoCurrency Risk Management
4. Spread Out Buy Orders over a Period
Investors should buy into positions over a period as opposed to placing large orders at once. It lowers your risk because you can make changes if the market turns against you. Buying over time and using smaller amounts to increases your chances of having a profitable trade.
5. Support and Resistance Levels
Focus on technical support and resistance levels. During crypto margin trading, minor price fluctuations will cause the price to move short-term support and resistance levels. Certain levels exist over multiple time frames, so you must familiarize with all of them.
Click on Below Video: Support & Resistance Levels for Newbies
6. Keep your Eye on Positions
Margin trading is not like patient investing. You can’t afford to put money and then ignore the market movements for days and weeks. In margin trading, a wrong turn can lead to massive loss of funds. You need to be ready to respond if things go the wrong way. By closely monitoring your trades, you can cut your losses faster and reduce the risk.
7. Benefits of Offline Wallet
Margin trading enables you to keep less of your cryptocurrencies sitting on exchange at one time. The best method for securing your funds is to keep them in the offline wallet. Only the amount that you want to trade should be available on the exchange. This reduces your risk and ensures that you have some extra funds available to hedge trades in the market goes against you. Keep in mind, in most exchange increasing the margin rate carries tighter liquidation prices and higher fees.
Click on Below Video: Basics of Margin Trading