Why is margin trading useful?
Margin trading provides experienced traders with unique opportunities to increase their profits, but for beginners it can seem complicated and risky. First of all, it is important to understand that margin trading is a strategy that allows you to trade with an amount greater than your initial deposit using leverage. This creates an opportunity to increase your profit potential, but it also increases the risk of loss.
Margin trading is fairly easy to get started. To make a leveraged trade, simply switch to the appropriate mode in the trading interface.
However, before you do this, it's worth mastering the basic terms, understanding how margin trading works and understanding what factors influence your trades. Our extensive article on margin trading and how it works can help you with this at this link.
What are the benefits and risks of margin trading?
Margin trading enables you to increase potential profits for traders, but at WhiteBIT it also has a number of important advantages, including:
- Flexible leverage from 1x to 10x;
- One of the key advantages is the low commissions. The commission for leveraging with any leverage ratio is 0.0585%. In addition, holders of the native coin of the WBT platform, can also get a discount of up to 100% on the Maker's commission;
- In addition, the user can also utilize other assets on the “Collateral” balance. This allows for a wide range of assets to be brought in to secure all positions, but the Collateral weight also needs to be considered. You can read more about this in the article at the link;
- The leverage fee is only charged if the order is at least partially executed, which helps reduce unnecessary costs. And also, unlike spot trading, there is an option to create an OCO order when opening a leveraged position.
However, it is important to recognize the risks. Using leverage increases the level of risk, which can result in losing an amount greater than your initial deposit. Effective risk management becomes critical to avoid serious financial losses. More information on risks and risk management strategies can be found in our dedicated article at this link.
How to choose leverage and trading strategy?
When choosing leverage, it is critical to consider your own financial capacity and risk level. High leverage can increase potential profits, but it can also increase the risk of loss. Effective risk management and the use of trading strategies become key elements of successful margin trading. For example, high leverage may be attractive for short-term strategies where a trader seeks to profit from small price changes, while for long-term investors whose goal is to hold assets for a long time, low leverage may be preferable, reducing the level of risk. You can read more about how leverage works in this article.
Trading strategies can range from short-term, focusing on price changes in the short term, to long-term, focusing on investing in promising assets. Based on analyzing technical indicators, fundamentals, or both, strategies help traders make informed decisions. For example, a few of the most popular trading strategies:
- Day trading — a strategy focused on short-term price movements. Traders open and close positions within one trading day, seeking to profit from rapid price fluctuations.
- Swing trading — this strategy involves holding the cryptocurrency for several days or weeks. Traders seek to profit from medium-term price movements.
- Position trading — traders who follow long-term trends hold cryptocurrency for a significant amount of time, often several months to a year.
- Scalping — a strategy based on making many short trades over a short period of time. The goal is to profit from small price movements.
- HODL — a popular strategy of holding a cryptocurrency for the long term despite short-term price fluctuations, with the expectation of value growth in the long term.
- Dollar cost averaging (DCA) — investing a fixed amount in a cryptocurrency at equal time intervals. This helps to smooth out the impact of volatility on the overall portfolio.
Please note: choosing leverage and trading strategies requires careful analysis and constant market monitoring. Training, experience and encouragement are essential for success in margin trading.
How to achieve success in margin trading?
To achieve success in margin trading, it is necessary to adopt a comprehensive and informed approach. Traders should strive for continuous learning, to deepen their knowledge of the market and trading strategies. It is important to manage risks and own capital effectively. It is also necessary to adapt to market changes, analyze your trades regularly and learn from experiences. The key elements are patience, discipline and a constant desire to improve your own skills in a dynamic margin trading environment.
Please note: continuous learning is a key element for those new to margin trading, as in this field, where market conditions are constantly changing, updating and expanding knowledge is crucial to successful trading.
It is critical to keep in mind that margin trading from scratch is a complex endeavor, and each trading strategy chosen involves a different level of risk. What may be successful for one trader is not necessarily suitable for another. It is also essential to realize that no one strategy will provide complete reliability and success for everyone who uses it. Therefore, it is always wise to do your own research and invest what you are willing to lose.
In case of any questions related to your account, trading or exchange functionality, you can: