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The most conspicuous benefit of margin trading is that it can bring about greater profits because of the greater relative value of trading positions. Apart from this, margin trading can be practical for diversification, as traders can open multiple positions with relatively low amounts of investment capital. Finally, a margin account can help traders quickly open positions without having to transfer large amounts of money to their account.
Despite all its advantages, margin trading has the disadvantage of increasing losses in the same way that it can increase earnings. Unlike ordinary cash transactions, margin trading introduces the possibility of losses greater than the trader's original investment and is therefore considered a high-risk trading method. Depending on the amount of leverage involved in a transaction, even a meager decrease in the market price can lead to significant losses for traders. For this reason, it is imperative that investors who decide to use margin trading use risk management strategies.
Trading margins in the cryptocurrency markets Margin trading is intrinsically riskier than normal trading, but for cryptocurrencies the risks are even higher. Due to the high levels of volatility typical of these markets, cryptocurrency margin traders should pay particular attention. Although hedging and risk management strategies may prove useful, margin trading is certainly not suitable for beginners.
Being able to analyze charts, identify trends and determine entry and exit points will not eliminate margin trading risks, but it can help better anticipate risks and negotiate more effectively. Therefore, before taking advantage of their cryptocurrency transactions, it is recommended that users develop a thorough understanding of technical analysis and gain extensive experience with spot trading.
Overall, margin trading is a handy mechanism for those looking to bolster the profits of their successful transactions. If used correctly, leverage transactions provided by margin accounts can result in both profitability and portfolio diversification.However margin trading method also exacerbate losses and bring about much higher risks. Therefore, it should only be used by highly seasoned traders. As far as cryptocurrency is concerned, margin trading should be approached with even greater care due to the high volatility of the market.
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Liquidity = the ease at which you can turn an asset into cash.
A market with deep liquidity can absorb large buys or sells without moving much. A market with very little will fall apart at the first sign of one person's big move. Plenty of markets effectively have none.
It's all well and good having an impressive headline price for an alt, but when you look at an exchange and the buys waiting it might only take a sell of $100 worth to reduce the price by 50%. A liquid market will have enough buys to swallow that sell without budging.
Helped a lot. Thank you for the explanation. No wonder CMC+s main indicator won't be trade volume but liquidity. Indeed, many used to hold the strong belief that trading volume is a good measure of liquidity. However, in recent years, more and more studies have shown that high trading volume does not necessarily imply high liquidity. This is true, especially from our perspective, since some exchanges have been known to directly or indirectly engage in a form of market manipulation called wash trading, in order to give unsuspecting traders the illusion of liquidity. Generally speaking, liquidity is how easily an asset or security can be bought or sold in the market, and converted to cash. From the cryptocurrency exchange and its traders' perspective, there are three common measures on market liquidity: - The most popular and crudest measure of liquidity is the bid-ask spread, which is also called width. A low or narrow bid-ask spread is said to be tight and tends to reflect a more liquid market on the exchange.
- The second measure is depth, which refers to the ability of the market to absorb the sale or exit of a position. If it takes a huge amount of capital to crash the cryptocurrency price in a top 5 market by a small percentage, the exchange is considered to have excellent liquidity.
- Finally, the last measure--resiliency refers to the market's ability to bounce back from temporarily incorrect prices. If an exchange often exhibit lasting bizarre market prices for major trading pairs, it is a very convincing indicator of poor liquidity.
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That's a really useful article for everyone who's considering to start margin trading! Cryptowisser team made a great job writing it. BaseFex as crypto margin exchange is also encouraging traders to get some margin experience and explore a whole new world of crypto derivatives, with associated higher risks taken into consideration.
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If your belief is BTC will go up, go with BTC because you will be doubling the long. But if you are uncertain of BTC's future price, you might want to consider using a stable coin because you won't be suffering, or gaining, from BTC's volatility. We were the world's first to offer USDT perpetual contracts and that was under a lot of traders' request. Right now we are witnessing larger turnovers on USDT-based pairs than BTC-based pairs (probably because of the dip):   |
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Where are you based?
We are based in Beijing, China, but our exchange is registered Seychelles. Are you available for US users?
We do not enforce KYC checks, and one of the principles we follow is borderlessness. |
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Well, can you name any manipulative exchanges? I'm extremely curious about this one.
We are not here to call names. And for sure we are not accusing anyone in unrighteous actions. We just commit ourselves not to fall in this abyss. We believe in the spirit of crypto freedom, transparency, and integrity, and we are ready to stand our ground. Again, how can we rely on these empty words? Do you have any proofs or cases?
We want the crypto community to know our pledges, so in time everyone will see that we are actually following them. Do you have any bonuses for new users? Yeah, you may use this link https://www.basefex.com/register/nmhXHcYou will get 10% commission discount |
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Well, can you name any manipulative exchanges? I'm extremely curious about this one.
We are not here to call names. And for sure we are not accusing anyone in unrighteous actions. We just commit ourselves not to fall in this abyss. We believe in the spirit of crypto freedom, transparency, and integrity, and we are ready to stand our ground. Again, how can we rely on these empty words? Do you have any proofs or cases?
We want the crypto community to know our pledges, so in time everyone will see that we are actually following them. |
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Today, the BaseFEX team has decided to announce the following solemn commitments to the global crypto community. - Respect for the users’ privacy. We will never require KYC/AML checks from our users, nor do we disclose user data to any authorities and governments.
- Personalized customer care. We treat every trader like a real person, not a number, and we strive to provide every trader with personalized support as best as we can.
- Transparency. There is no hidden fees or any kind of secretive system setups in our system, and we do not use our system to take advantage of users in any circumstance.
- Financial ethics. We do not conduct any kind of market manipulation.
These commitments are in line with BaseFEX’s newly-defined brand values, which we believe are the common objectives shared by the global cryptocurrency community: - Respect for Privacy
- Security
- Decentralized
- People-powered
- Boundless
- Transparent
We, therefore, pledge our unstinting support for these common values and our determination to fulfill them. BaseFEX Team Nov 1st, 2019 Start trading now! |
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I have just two questions:
- how does it come that you don't require any KYC?
- What are the limits?
We consider ourselves believers of the original spirits of cryptocurrency. Therefore respect for our users' privacy and data security are more important for us than what all these exchanges get in return from KYC obedience. No limits associated with no KYC at all. We do not require KYC for any of our services. You said all withdrawals are checked manually, which isn't bad. However how long does it take?
I remember having seeing withdrawals on Huobi which took 48 hrs because no one was able to check it and approve.
Currently we have one manual withdrawal audit everyday at 3pm UTC+8.So let's say you submit a withdrawal request at 2pm UTC+8, your request would be handled in 1 hour. If you do that at 4pm, your request will be handled 23 hours later, which is the longest you can wait. And we plan to increase the frequency of manual audits in respond to users' feedback. Hopefully that can happen soon. |
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See it now. Thanks a lot! Wish you guys good luck and become the CMC of futures and contracts  |
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You are probably doing market orders since you are being charged fees.
The thing is, in margin trading, the takers fees are calculated with your (leveraged) position value, not your margin. So your position value is way larger than your margin, and that's the basis of calculation for taker fees.
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If you do margin trading with more than x5 leverage you can possibly earn big bucks from day trading.
Source: what we have seen among our users. Plenty of them open and close positions within a day.
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You can always short cryptocurrencies with futures trading/margin trading. Although it is mostly a sophisticated traders' thing.
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Good news, today we starting connection to your exchange. Announce will be soon. Can you check from your side, after 1... 2 day - accurateness of market data and announce for your users at news feed|blog/twitter etc.? Updated: Connected and your data represented at our portal - announced there (and few analysis moments). First place at BNB market - Awesome! 💪 Thanks for including us! I took a look at https://test.contractmarketcap.com but it doesn't seem the data is being properly synced right now. I will check it again next week. |
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Awesome work, great!
We are the world's first derivative market data platform - ContractMarketCap.com and we hope listed your exchange and adding your data to our markets overview.
If I have o some questions about API and some details, who can help me? Lot of thanks!
Just DMed you. Thanks! |
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We are an exchange ourselves, and we think exchanges shall never collect KYC info from customers because, hey guys, let's face the uncomfortable reality:
We, as small-to-medium size businesses ( let's admit it guys, even the largest exchanges shall be considered mid-size business by real world standard), are not as sound as government agencies in terms of cyber security and the short history of crypto we have lived through has already proven this point hundreds of times. And, if a hack does occur, we don't have the kind of resources nor the legal authority to track down and arrest hackers and retrieve the lost KYC info.
Collecting KYC info jeopardizes our customers' privacy, and also infringes the original spirits of cryptocurrency. That's why we as a team decide we will never make KYC requirements. Period.
Sadly, some government agencies are making these inconsiderate requests that equally jeopardize their citizens' privacy.
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This will have no negative effect on Crypto market. Even if story was true, I doubt the Chinese government will let other Cryptocurrencies compete with it in the country. They could even go as far as banning other Cryptocurrencies and making this the national cryptocurrency.
No government is capable of banning cryptocurrencies due to the decentralized nature. In the early days of crypto there were attempts similar to what you say but none of them ever worked. All kinds of cryptocurrencies are already circulating at large volume in the country. |
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