Bitcoin Margin Trading Explained: All Worth Knowing!

Like every other commodity in the stock market, you can carry out margin trading with cryptocurrency. Margin trading with cryptocurrency refers to trading by borrowing funds from an exchange and using the funds to make a trade. You can trade with a crypto coin of choice since several are in the market. A good number of crypto exchanges will allow you to trade on margin. It is always advisable to use the best and most reliable, such as PrimeXBT.

These exchanges also support different coins.

What’s Bitcoin Margin and How does it Work

Bitcoin Margin Trading is where you open a Bitcoin trade position with borrowed funds from an exchange. It is similar to what we described above. The only difference here is you will be using a crypto wallet, and the funds will be in bitcoin.

There are several trading pairs that you can trade with Bitcoin. Some of them Include that are offered by exchanges such as PrimeXBT include:






Specific fees are usually charged when you choose Bitcoin Margin Trading. There are fees for opening a position and an interest on the borrowed funds or coins. Most fees for opening a position are usually standard, but the interest, also known as the funding rate, varies and it depends on a number of factors. Such factors may include the premium between the spot and future prices of the coin- the premium is usually re-calculated at a constant frequency.

Most traders usually choose to trade on margin because they lack enough capital to open a position. These exchanges come in. They give loans to the traders, loans they will pay back after a successful trade. These loans enable the traders to widen their capital and, therefore, open positions with high leverage.

What Should You Look for in a Bitcoin Margin Trading Exchange?

Margin trading involves taking a “loan.” As such, you would need and require favorable rates, a favorable environment and most important of all, a reliable and efficient exchange.

This is what you should consider:

· You should research and check if the exchange is safe to trade. Since you are trusting it with your money, it should never have been hacked and have in place quality security measures

· Should have advanced trading tools that are up to date with the market

· It should have a high read review. The opinion of other traders also matters. If the read review is high, then the platform is reliable.

· It should have high trading volume and liquidity. A high trade volume allows you to invest a high amount of cash.

What are the Advantages and Disadvantages of Bitcoin Margin Trading?

The most significant advantage of this kind of trading is perhaps the potential for significant returns within a short period. Bitcoin Margin Trading also allows you to create big positions with less capital. This is what makes it possible to gain more. You invest less for more.

It also allows you to keep less Bitcoin on an exchange. Since you need just a tiny amount of Bitcoin to secure more prominent positions, you won’t need to have a lot of it in your wallet with the exchange. This gives you a sense of security.

Just like the greatest advantage is the potential for bigger wins, it can also be the biggest con. Bitcoin Margin Trading is overly high-risk and volatile. With that, your chances of gaining are greatly reduced. Since you can secure bigger positions with lesser capital, your chances of losing a lot of money also increase. The volatility of this trade can cause you to lose a lot in seconds.

Last but not least, margin trading requires a lot of precision and great timing. You have to be extremely keen. This can be quite a challenge if you are an inexperienced trader, resulting in huge losses.


There is more to trading than meets the eye. Hopefully, this article was informative enough. If you would love to know more, explore PrimeXBT’s website for more information on trading.

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