Crypto Margin Trading – Tutorial & Best Exchanges

With a boom in cryptocurrency, margin trading on this volatile asset provides new and potentially lucrative opportunities. In this tutorial, we explain how to trade crypto on margin plus offer tips for choosing the best exchanges and platforms. We also cover the pros and cons of crypto margin trading and a guide to getting started.

Crypto Margin Trading Platforms

#1 - AvaTrade

Why We Chose AvaTrade

Regulated in five continents, AvaTrade offers a secure way to access crypto markets. There's a great range of digital currencies including Bitcoin, Ethereum and Ripple, plus a crypto index. You can access competitive crypto spreads in the broker's wide choice of platforms as well as 1:2 leverage.

"AvaTrade offers the full package for short-term traders. There is powerful charting software, reliable execution, transparent fees, and fast account opening with a low minimum deposit."

- DayTrading Review Team
  • Coins: BCH, BTC, BTG, ETH, LTC, XRP, EOS, DASH
  • Crypto Mining: No
  • Auto Market Maker: No
  • Crypto Spread: BTC <1%, ETH 2%
  • Crypto Lending: No
  • Crypto Staking: No
  • Platforms: WebTrader, AvaTradeGO, AvaOptions, AvaFutures, MT4, MT5, AlgoTrader, TradingCentral, DupliTrade
  • Regulator: ASIC, CySEC, FSCA, ISA, CBol, FSA, FSRA, BVI, ADGM

#2 - OANDA US

Why We Chose OANDA US

Cryptocurrency trading is offered via Paxos, a separate entity from Oanda. You can speculate on the world’s biggest cryptos by market cap. Commissions are lower than many peers starting at 0.25%. Through the broker’s partnership with Paxos, clients can spot trade cryptocurrencies on the itBit exchange through the OANDA native platform.

"OANDA remains an excellent broker for US day traders seeking a user-friendly platform with premium analysis tools and a straightforward joining process. OANDA is also heavily regulated with a very high trust score."

- DayTrading Review Team
  • Coins: BTC, ETH, LTC, BCH, PAXG, LINK, UNI, AAVE
  • Crypto Mining: No
  • Auto Market Maker: No
  • Crypto Spread: $100
  • Crypto Lending: No
  • Crypto Staking: No
  • Platforms: OANDA Trade, MT4, TradingView, AutoChartist
  • Minimum Deposit: $0
  • Regulator: NFA, CFTC

#3 - Eightcap

Why We Chose Eightcap

Eightcap’s crypto offering is best-in-class with 250+ crypto derivatives, surpassing that of almost every alternative. Testing also reveals Bitcoin spreads of 12 pips, coming in lower than most competitors, while it offers real-time trading ideas through the Crypto Crusher market scanner. Add in convenient deposits and withdrawals in digital currencies, and Eightcap offers the complete package for serious crypto traders.

"Eightcap delivers in every area for day traders with a growing selection of charting platforms and AI-powered tools. Now sporting 250+ crypto CFDs and the Crypto Crusher market scanner, it's also become a stand-out choice for crypto trading, winning our 'Best Crypto Broker' award two years in a row."

- DayTrading Review Team
  • Coins: BTC, ETH, LTC, BCH, XRP, XMR, DSH, EOS, XLM, ADA, TRX, DOGE, BNB, DOT, MATIC, VET, AXS, NEO, SOL, UNI, AAVE, KSM, THETA, CAKE, SUSHI, ATOM, XTZ, SNX, COMP, FLOW, EGLD, PUNDIX, RAY, ZIL, QTUM, BAND, OMG, FIDA, BADGER, NEAR and many more
  • Crypto Mining: No
  • Auto Market Maker: No
  • Crypto Spread: $12 (BTC)
  • Crypto Lending: No
  • Crypto Staking: No
  • Platforms: MT4, MT5, TradingView
  • Minimum Deposit: $100
  • Regulator: ASIC, FCA, xCySEC, SCB

#4 - Uphold

Why We Chose Uphold

You can buy and sell 250+ crypto assets with fiat currencies or in crypto pairs using the straightforward mobile app or through Uphold's browser-based account homepage. This is significantly more than many rivals. You can also earn up to 16% APY by staking one or more out of 32 valid tokens, or send tokens to an external wallet.

"Uphold remains a top choice for crypto investors looking for a one-stop-shop solution to accessing the markets. There are over 250 tokens to buy, sell and trade through flexible platform options."

- DayTrading Review Team
  • Coins: BTC, BTCO, AAVE, ALCX, DYDX, INH, XYO, API3, GHST, LSK, AUDIO, GLMR, NMR, CAKE, GODS, REQ, CHR, TRB, DAO, ROOK, XRP, ETH, BAT, ADA, ALGO, ATOM, AVAX, AXS, BCH, BAL, BTG, CSPR, COMP, CRV, DASH, DCR, DGB, DOGE, DOT, EGLD and many more
  • Crypto Mining: No
  • Auto Market Maker: No
  • Crypto Spread: Up to 1.5%
  • Crypto Lending: No
  • Crypto Staking: Yes
  • Platforms: Desktop Platform, Mobile App
  • Minimum Deposit: $0

#5 - IC Markets

Why We Chose IC Markets

IC Markets offers 20+ cryptocurrencies which are tradable via CFDs, including lesser-known tokens such as Avalanche, Kusama and Uniswap. Commission-free trading is available, and experienced crypto traders can access high leverage up to 1:200 in the MetaTrader platforms.

"IC Markets offers superior pricing, exceptionally fast execution and seamless deposits. The introduction of advanced charting platforms, notably TradingView, and the Raw Trader Plus account, ensures it remains a top choice for intermediate to advanced day traders."

- DayTrading Review Team
  • Coins: BTC, BCH, DOT, DSH, EMC, EOS, ETH, LNK, LTC, NMC, PPC, XLM, XRP, ADA, BNB, DOG, UNI, XTZ
  • Crypto Mining: No
  • Auto Market Maker: No
  • Crypto Spread: BTC 42.036
  • Crypto Lending: No
  • Crypto Staking: No
  • Platforms: MT4, MT5, cTrader, TradingView, TradingCentral, DupliTrade
  • Minimum Deposit: $200
  • Regulator: ASIC, CySEC, FSA

What Is Crypto Margin Trading?

Crypto margin trading is the practice of using leverage to multiply the results of a trade. The amount a trader has deposited in their account is known as the margin.

A broker offering margin trading will provide traders with a leverage quote, this is usually displayed as either a ratio (e.g 1:2) or a multiple (e.g 2x), meaning that for every 1 base crypto coin, the results of a trade are multiplied by 2.

How does crypto margin trading work

To enable traders to open larger positions, the broker allows them to borrow capital. This will need to be paid back in full, but the profits can be retained by the trader.

For example, if your leverage is 1:2 and you deposit $1,000, you can open positions with a total value of $2000.

If you use this to purchase Ethereum and the price moves 5%, you’ll have $2,100 worth of ETH.

If you close your trade there and return the $1,000 borrowed, you’re left with $1,100, having made a $100 profit.

If you’d placed the same trade in your spot account, you’d have made a $50 profit.

It’s important to note that profits are amplified, but equally, so are losses. Plus, your borrowed amount will still need to be returned. Therefore, margin trading on cryptos should only be utilised by knowledgeable investors.

Some of the top crypto exchanges now offer crypto margin trading, including Binance, Kraken and Crypto.com. However, it is a fairly new practice, so some of the top brokers for professionals, such as TradeStation, are yet to facilitate crypto margin trading.

What Is A Margin Call?

If the price of the asset held on margin drops in value significantly, a broker will issue a margin call. This means that traders will have to prove that they can return the amount borrowed, by depositing more funds.

The account will usually be suspended from opening new trades until this has been completed, or the asset rises in value again.

A margin call is designed to protect traders from losing more than they can afford.

For example, if you’re trading $1,000 on margin with 5x leverage and the value of ETH drops 17.5%, the value of the asset you hold is now worth $4,125.

Your operating loss is -$875. Since you’ve only deposited $1,000, you’re in danger of losing more than your initial deposit amount if the value slips further. At this point, a margin call may be issued.

Pros Of Crypto Margin Trading

Cons Of Crypto Margin Trading

How To Start Crypto Margin Trading

To start crypto margin trading, you’ll first need to select a broker or an exchange that provides the service. Some of the best crypto exchanges that offer margin trading include Binance and Kraken. Then sign up to an account and complete any KYC checks. Most exchanges will require proof of identity if they also offer fiat exchange, however, there are some, such as Prime XTB, which have no KYC checks. Next, visit your settings. There will usually be an option to switch your account from spot to margin trading. In some cases, you’ll then need to transfer tokens to your margin account.

Binance crypto margin
Binance how to switch to crypto margin trading

Choosing A Crypto Margin Trading Broker

Final Word On Crypto Margin Trading

Now we’ve explained the ins and outs of crypto margin trading, you’ve hopefully got the understanding to get started. Bitcoin and other cryptos are highly volatile markets and while trading on margin can mean huge upside, retail investors should also be aware of the risks involved. It’s possible this asset could suffer from increased regulation in the future, but for now, it represents an exciting opportunity for traders.

FAQ

How Does Bitcoin Margin Trading Work?

Crypto margin trading means investors can multiply the results of their Bitcoin trade by utilising leverage. Leverage is the number of times you can multiply the results, it is either written as a ratio (e.g 1:3) or a multiple (e.g 3x). Leverage allows traders to borrow funds from their broker. In this way, a trader can execute much larger positions than their deposit amount and can amplify profits.

Are There Many Crypto Exchanges That Allow Margin Trading?

The top crypto margin trading exchanges that allow margin trading include Kraken and Binance, but there are more to choose from. However, availability does vary by location. Some popular exchanges, including eToro and Coinbase, have suspended crypto margin trading at times due to volatility in the market.

Bitcoin margin trading in the United States is restricted by the Commodity Futures Trading Commission (CFTC). Regulated exchanges that previously offered the service, such as Coinbase and Binance, have removed leveraged trading in 2021 for clients from the USA.

Will A Crypto Margin Call Go Away?

A margin call will cease once your account has been deposited with sufficient funds or the asset has increased in value. A margin call is designed to protect a trader from losses that exceed their deposit amount.

Can I Trade Crypto On Margin?

Yes, some of the top Bitcoin exchanges now offer trading on margin, with the opportunity to multiply the results of any trade. Whilst the practice is restricted in some jurisdictions, like the US, it is available in the UK, Australia, India, and Canada, to name just a few.