Crypto Academy Week 12 - Homework Post for @stream4u

INTRODUCTION

As one begins to advance in crypto trading, one will find several advanced features which help to increase profit. These features come with increased risks as well and as such are best suited for the advanced traders. Some good examples of these features are margin trading and leveraged tokens trading.

Both make it possible for traders to trade with far more than they have in order to make more profit. They however, require the trader to have great forecasting skills as they can bring the house down if prices don't go in the trader's favor.

MARGIN TRADING

What Is Crypto Margin Trading?

Crypto margin trading is an advanced trading option provided by some crypto exchanges where traders can trade with as much as 3x, 5x or more of the funds they have in their accounts. It is a trading option that can multiply profits as well as losses.

How To Plan For Trading In Crypto Margin Trading

Trading with margins is very risky. If you trade with a 3x margin, as the price fluctuates, if you're in profit, it's 3x, if you're in loss, it's also 3x. Same goes for a 5x margin. It is therefore important to plan for your margin trading before you even begin.

In planning for your margin trading, consider the following:

1. Use Short timeframe: Crypto prices fluctuate unpredictably and since margin trading multiplies both profit and loss, it is important to apply short time frames to reduce the frequency of fluctuations in prices. You should plan intraday trade, preferably use 5 minutes or 15 minutes time frames.

2. Follow technical studies: One of the safe ways of trading in crypto is to follow technical studies. Buying when technical studies indicate support and selling when technical studies indicate resistance is a safe practice when trading with margins. Proper use of trendlines and supertrends will also increase the chances of making profits and reduce the chances of making losses.

3. Book small profits: Greed can lead to losses in margin trading. While trading within short time frames it is safer to book small profit and close the position than to wait for a bigger profit and risk losing funds due to constant fluctuations in prices.

4. Hold multiple positions: because there is the possibility of the trade going against the trader, it is not safe to put all the capitals in one asset rather multiple assets being invested in will help the trader cover up for losses in some of the assets with the profit from the other assets.

Crypto Exchanges Name That Provide Margin Trading Service and What Margin They Provide?

Below are crypto exchanges that provides margins and the margins they provide

BINANCE

• Cross margin - 3x
• Isolated margin - 10x

HUOBI GLOBAL

• Cross margin - 3x

^source

• Isolated margin - up to 5x

^source

• C2C - 3x

^source

POLONIEX

• Margins - 2.5x leverage

KRAKEN

• Margins - up to 5x

^source

LEVERAGED TOKENS TRADING

What Is Leveraged Tokens Trading?

Leveraged tokens trading is simply trading leveraged tokens. Leveraged tokens are assets that allow traders to trade against the price direction rather than the price.

Leverage tokens are usually price directions/movement of other tokens, eg. for ether (ETH), leverage tokens are ETHBULL or ETHUP for an increase in price of ether and ETHBEAR or ETHDOWN for a decrease in price of ether.

How To Plan For Trading In Leveraged Tokens?

• Price prediction: With leveraged tokens, the trader has to be skillful in price prediction. Making profits from trading on the direction of the price of an asset requires the trader to be well grounded in price prediction.

• Adhere to technical analysis: The trader must ensure they follow technical analysis as well as trade cautiously. If they do this, there will be minimal losses and also an increased chances of making gains.

• The trader has to understand the risk associated with the margins they are trading with. The higher the margin, the more careful the trader has to be. There should be no holding of a position for too long.

Crypto Exchanges Name That Provide Leveraged Tokens Service and What Margin They Provide In Leveraged Tokens?

BINANCE

Up to 4x leverage on leverage tokens

^source

POLONIEX

Up to 3x leverage on leverage tokens

^source

HUOBI GLOBAL

Up to 3x leverage on leveraged tokens

PRICE FORECASTING

Price Forecast For Crypto Assets

Whether it is margin trading or leveraged tokens trading, good skills in price forecasting is necessary. Below, I'll do a forecast of ether (ETH) over the next one week.

Here's the price history of ETH/USDT since February.

From the chart above, we see ETH doing a BEAR just before the month of March began. From then on, it began to rise slowly with little drawbacks. The number of green candlesticks outnumbered that of red and so it continued until sometime in April.

In the yellow circled area, ETH seemed to take a slump for days before bouncing back just before another slump. The latter was lesser than the former and in a short while (the day pointed by a purple arrow), the price broke out.

ETH's price upward movement has continued ever since and though there can still be fluctuations in price, I'm optimistic it will continue.

I remember telling a friend 'ETH is going to $3k' back when it broke the $2.6k mark. I'm not sure where ETH is going from here, but I'm predicting anyways.

MY PREDICTION

ETH will come down within the next seven days. It might stay above 3k for 4 or 5 days, but not more. Coming down, it may not do a free fall but might rest within the $2.5k - $2.7k range.

DISCLAIMER: This is my personal opinion and not an investment advise. Proper study should be undertaken by any potential investor before they make their decisions.

CONCLUSION

Margin trading and leveraged tokens trading are advanced trading options that gives the trader proficient in price forecasting, the ability to invest more than they have to earn more profits than they could have. They however should be traded cautiously as they can also magnify losses just as they do to profits.

Thanks for reading.

@stream4u