What is the best way to make money using a currency with high volatility as its primary feature? The first idea that comes to mind is to buy it low and sell high so that to reap a fair profit from the difference in prices. Well, that’s the main idea, although you wouldn’t earn too much money with it. In order to gain greater profits you should use some ancillary services, that will help you to boost your capital. Margin trading is one of them.
What you should know about margin trading
The driving force for margin trading is the volatility of a currency that is traded. Since cryptocurrency has this feature it appears to be the best option for it. If you are an experienced trader, it doesn’t really matter whether the rate is increasing or decreasing, you can make profit in both ways:
- Long position. If you think that the currency is about to increase in its rate, you’d probably fall for this method. Here’s a simple example: Let’s say that Bitcoin current price is $2500 and you reckon it will increase, so wish to buy 1BTC. In order to do this you can only have $1250 on your account and borrow another $1250 by opening a long position with a leverage of 1:2. So, basically the broker website, in our case it’s CEX.IO, borrows you the same amount of money you have funded. Thus, let’s say the currency has increased up to $3000. If you close the position at this point, that means that $1250 you have borrowed will be automatically returned to the broker, while your earnings will constitute $500 minus fees.
- Short position. In a course of events where you think the exchanging rate is about to go down, you need to use this approach. Here’s an example: Bitcoin price is $1500. What you will do is borrow 1BTC, sell it and get $1500. When the price goes down, let’s say $1250, you buy 1 BTC and give it back to the broker. By the end you will have $1500-$1250=$250 minus fees.
Why choose CEX.IO?
Some people think that margin trading is much like a casino because you either win or lose and it’s not always about your skills. CEX.IO offers a better insight into this notion, because in this case the more profits the trader gains, the better it is for a service provider. Now with a new and unique risk-preventing feature, CEX.IO is the platform that guarantees your balance account won’t drop to negative values. Which is drastically different from the poker game where the only winning participant is, eventually, the casino.
If you are an advanced trader, this feature will definitely intrigue you, because basically it, in a good sense, changes the rules of the game, so that breaking even is the worst thing that can happen to you.
Being a newcomer, you will be glad to hear that CEX.IO is in the top of the most convenient websites for beginners. With a user-friendly interface and a number of website-based tutorials, it is the best option for those who would like to start trading cryptocurrency. There’s no need in creating an extra account for it, and transfer money from one to another. Everything is in one account, within a click you can either buy/sell cryptocurrency in the exchange, or use the margin trading service and earn a considerable amount of money, depending on your skills.
Although the intuitive interface is the first feature that attracts users, safeness is ultimately the most important attribute. Regular improvement of the website security is a general rule for CEX.IO. From two-factor authentication and full data encryption, that won’t let your personal data be exposed, to PCI DSS certificate that was recently upgraded to the 2nd level, which is a very important significative for an exchange.
If you are well-acquainted with the Bitcoin world and already using some other exchanges, you will be glad to hear that having a Verified Plus Account, there are no payment limits. The more Bitcoins you trade, the larger the potential income is. So, the unlimited payment method will definitely contribute to your revenue in margin trading. Considering the fact that CEX.IO prevents you from the risk of losing your money, it appears to be the best platform for margin trading.
A guide on how to do margin trading with CEX.IO
First things first! You should register on the website. You can log in using Facebook, Google, or other social network accounts, it will take you only few clicks. The next step is the verification of your Bank card.
After you’re done with it, you are ready to use the services of the website. So, margin trading:
- Go to the “Trade” section on the top of the Web page and choose the trading pair.
- Click “Margin trading”. As it was described in the first chapter of the paragraph and as you can see directly on the website, you can either open a long position which is profitable if price grows, or a short position if you forecast that the price falls. Let’s try opening a long position.
- Choose the collateral currency (a currency with which you will be trading, of course, you should have an appropriate sum of this currency on your account) and a leverage (a ratio of your funds and borrowed money). Let’s choose BTC with 1:2 leverage.
- Write the position amount. If you double-click on your “BTC balance”, the system will automatically calculate all the fees and the position amount according to your balance (as in the example: 0.01104324 * 2 = 0.02204238) So, basically the position amount is the total amount of money (your own and borrowed funds). NOTE: The website states the minimum position amount. If it is less than required, you’ll need to fund your account with extra money in order to open a position.
- Check and open a position. You can click on the “More info” button and figure out what is what. If you are satisfied with all the fees and conditions, you open a long position by clicking on the corresponding button.
- Track your position. You can track what’s going on with your position by scrolling a little bit down and going to the section “Active positions”.
- Close the position when you think it’s necessary. You can do that by clicking on the “close” button in your active positions list.
Well, that’s it! If you face some issues through the process you can always ask for the support team guidance in a helping chat. Generally, it’s a matter of minutes.
Margin trading is considered to be a risky way of earning money, but it can bring you good incomes if you know how it works. However, CEX.IO provides the platform that minimizes your risks almost to non-existent. With user-friendly interface and the advanced trading mechanism, it appears to be the best platform for both: newbies and advanced traders. If you are a beginner who is interested in Bitcoin – give it a try. If you have experience in trading cryptocurrency, try CEX.IO to move to a new level and reap all the benefits of margin trading.