PrimeXBT is an award-winning margin trading platform, but not everyone truly understands what margin itself means. Margin is often confused with leverage, and while they are closely related, they are not the same.
This guide will explain the differences between leverage and margin, along with outlining all the facts and features about the trading platform known best for margin trading excellence.
What Is Margin? All About Crypto Margin Trading
Margin in the simplest of terms, is borrowed money from a broker to be used for investing or trading. Because when people think of investing they think of people using their own money and putting it on the line in markets, they often don’t understand the concept behind margin and why it matters.
Margin accounts are typically tied to derivatives trading, which are contracts that are settled but don’t actually trade the underlying asset. For example, when an investor buys Bitcoin, they own BTC the asset. But with derivatives trading, they can go long or short Bitcoin, without ever owning any BTC. The price of Bitcoin from the time the contract is opened and the difference in price at the time the contract is closed determines the profit or loss associated with the position.
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The Difference Between Margin And Leverage Explained
This type of trading instrument requires margin to trade the contracts. Margin can also be used to add certain modifiers to each contract, such as leverage. The amount of leverage is offered at the discretion of the broker, and in some cases the trader can select how much leverage is applied.
When cryptocurrency leveraged trading, it is imperative to maintain a proper level of margin allocation to cover any positions and additional margin in case the market moves against you. For example, if a trader opens up a position with 80% of their margin, and the market moves against them substantially, it could bring the margin allocation level dangerously close to receiving a margin call or worse – being liquidated.
How To Avoid Margin Calls With Leverage Trading
Margin calls occur when the amount of margin is closing in on not enough to cover positions and is a warning to add to positions. Failure to properly allocate margin can result in a liquidation, which closes all available positions to attempt to prevent the account from falling negative.
Leverage amplifies the profits or losses from successful long or short positions and can mean the difference between fast or slow capital growth. Although risks are increased, using PrimeXBT traders can add stop loss orders or plan ahead with technical analysis to prevent extensive losses and increase the chances for success.
PrimeXBT Margin Account Currencies And Benefits
PrimeXBT utilizes four different currencies for account margin, and support for more currencies – including fiat – is in place with the latest infrastructure update. The update, dubbed PrimeXBT V2.0 added ETH, and stablecoins USDT and USDC next to the existing BTC-based margin accounts.
The added currencies provide traders with even more flexibility, broadens the reach of the platform itself, and gives users a stable account base currency solution to protect against crypto market volatility.
Why Stablecoins Make Great Margin Currency
In the past, someone might have a winning trade open, but if Bitcoin was falling in price, the account value would fall due to the margin currency being BTC. But by relying on a margin account based on a stablecoin that always trades at a stable dollar value, this volatility can be eliminated entirely.
Instead, traders can fully embrace the notorious crypto market volatility and begin to use it to their advantage. Taking advantage of the built-in technical analysis software provided by PrimeXBT can also provide a competitive advantage. More than 40 different indicators are included, such as the RSI, MACD, Average Directional Index, Moving Averages, and more.
The Growing List Of CFDs
Using the tools anyone can find the right zone to go short or long any of the 50 different trading instruments offered by PrimeXBT. The growing list of CFDs includes stock indices, forex, commodities, metals, and crypto.
The list of CFDs includes the likes of Bitcoin, Ethereum, Litecoin, EOS, and Ripple, as well as the Dow Jones, S&P 500, and the FTSE. Gold and silver are also offered, alongside oil, natural gas, and all major forex currencies. More trading instruments are always being added.
Covesting Copy Trading For Followers And Strategy Managers
Traders struggling to get the hang of markets themselves can turn to the Covesting copy trading module on PrimeXBT, which connects followers with top strategy managers ranked in the global leaderboard system.
The fully transparent metrics help followers to pick and choose the best strategy for them, and begin to copy the trades that strategy performs. If the strategy is successful, so is the follower and each earns a portion of the profits.
COV Token Staking Unlocks Account Level Utilities
COV token staking unlocks several more account level enhancements and utilities thanks to three new memberships above the standard account. New Advanced, Premium, and Elite accounts each improve the profitability for followers and strategy managers alike.
Covesting Yield Accounts are also on the way in the near future, scheduled for Q3 2021. This forthcoming tool brings DeFi to PrimeXBT in a big way. Using the software interface, users can interact with top DeFi protocols right through the normal account dashboard they’re familiar with.
More Features, And More Ways To Make Money
That dashboard itself is highly customizable, and provides a wealth of information to account holders. A new reporting section was recently added for accounting and tax reporting purposes, and there is a unique way to get positioned in the market called Turbo.
A four-level referral system offers other ways to make money when the market is stagnant, or to bolster revenue when the market is hot. Whatever the case may be, the award-winning trading platform has a way to stay profitable and one step ahead of the rest of the market.