Hi everyone, In this homework week 4 task post, I will be answering this week’s task on Crypto Margin Trading & Crypto Leveraged Tokens Trading, a task by @stream4u - I will be giving my opinion and writing about what crypto margin trading and leveraged tokens are all about and also giving my price prediction on a selected cryptocurrency. When it comes to trading financial products or instruments in cryptocurrencies, these are very important topics to understand as it goes a long way for a profitable trading.

What Is Crypto Margin Trading?

When it comes to cryptocurrency trading, margin trading has become really popular and a lot of crypto exchanges are adopting margin trading as one of their features. Every trader a lot of times wish they had more capital to invest in a cryptocurrency asset for trading in order to make even more profit from using more capital. When a crypto trader is done with technical analysis of a particular cryptocurrency and is confident that the cryptocurrency will go in an upward direction, the trader always wish to have more money to make the trading move in order to capitalize on the price increase and make more profit. However, this is not always the case because no trader always have the enough capital and will always want more to make even more profit.

Margin trading is simply the act of borrowing extra funds from any platform or crypto exchange that provides margin trading so as to have more trading capital to invest in a particular cryptocurrency asset in order to increase profit. Simply put, margin trading involves a crypto trader borrowing a cryptocurrency asset to add to his/her original capital to have more capital to make bigger profit from the trade. For instance, crypto trader A who wants to perform a margin trade on Binance has $200 capital and wants a capital of $1000, the trader “A” decides to borrow extra $800, making it $1000, while using his/her original $200 as capital. This becomes a 5x margin trade which means that if the price of the cryptocurrency increases, the trader “A” would make a 5x profit, same goes to when the price of the cryptocurrency decreases, the trader “A” would make a 5x loss and can be liquidated.

How to Plan For Trading in Crypto Margin Trading

Margin trading involves a lot of high risk that is why it is important to plan for trading before venturing into crypto margin trading. Planning for crypto margin trading requires the trader to

• First have proper knowledge of the different types of analysis such as fundamental analysis, technical analysis and sentimental analysis, so as to be able to make better price forecasting which is essential when it comes to crypto margin trading.
• Reduce risk by only using funds that are meant for high risk investments
• Only work with information and data from analysis and not emotions or personal bias
• Strategize and draw out a clear plan for entry and exit
• Should never neglect the trends as it can greatly influence the price of cryptocurrency
• Have an effective trading rule and always stick to it
• Should focus mainly on technical analysis especially for short term margin trades

Crypto Exchanges Name That Provide Margin Trading Service

• Binance – Binance is without a doubt one of the biggest crypto exchange and ecosystem if not the biggest, offering margin trading up to 5x on large cap cryptos
• Kraken – Kraken is another big crypto platform, offering margin trading up to 5x on large cap cryptos
• Poloniex – Poloniex is one of the top crypto exchanges offering margin trading up to 2.5x
• BitMEX - BitMEX is also a top crypto exchange offering margin trading especially on BTC with up to 100x leverage.
• Bityard – Bityard is also another very good platform offering margin trading up to 125x

What Is Leveraged Tokens Trading?

Leveraged tokens are quite similar to margin trading, however, in leveraged tokens trading, there is no need for the trader to worry about collateral or liquidation, instead have a big chance of increasing profit from the leveraged cryptocurrency. Unlike margin trading, leveraged tokens trading involves ERC-20 tokens on the ethereum blockchain and also, leveraged tokens are mostly for short term trades and not for long term holding.

Simply put, leveraged tokens trading is basically a financial instrument where a crypto trader trades leveraged tokens which are ERC-20 tokens that have leveraged exposure to cryptocurrency. When it comes to leveraged tokens trading, there are two types namely; hedge also known as 1x or BULL/BEAR also known as 3x. For instance, ETHBULL is a 3x long ETH token… what this means that every time ETH prices rises by let’s say 2%, ETHBULL rises by 3x which means ETHBULL rises 6%. One of the main benefits of leveraged tokens trading is that it will invest the profit into the underlying cryptocurrency asset automatically. This means that if a trader’s leveraged tokens position makes profit, the tokens will be put on 3x positions with that profit automatically.

How To Plan For Trading In Leveraged Tokens

Leveraged tokens trading involves a lot of high risk as well and thus there is a need to plan. Planning for leveraged tokens trading requires the trader to

• Have an effective trading rule and always stick to it
• Strategize and draw out a clear plan for entry and exit
• Only work with information and data from analysis and not emotions or personal bias
• Reduce risk by only using funds that are meant for high risk investments
• Should never neglect the trends as it can greatly influence the price of cryptocurrency
• Must have a very good understanding of all the different types of analysis such as fundamental analysis, technical analysis and sentimental analysis, most especially technical analysis so as to be able to make better price forecasting which is essential when it comes to crypto margin trading
• Should focus mainly on technical analysis especially for short term margin trades
• Always trade leveraged tokens with caution because of the high level of risk involved.

Crypto Exchanges Name That Provide Leveraged Tokens Service

Kucoin – Top crypto exchange that provides up to 10x leverage

Hedge – Hedge is a platform that Provides leveraged token trading up to 1x

Huobi – Another top crypto exchange that provides leveraged tokens up to 5x

Kraken – One of the top exchanged that provides leveraged token trading up to 5x

Price Forecasting of Crypto Assets

Back again with another price forecasting, this time, I will be aiming to forecast the price of The Graph GRT. Using technical analysis, i am looking out for patterns that can help me figure out the next direction GRT would go in the next coming week

[Chart on coinmarketcap]

[Chart on tradingview]

Using Higher Highs and Lower Lows Indicator

Using supertrend indicator which signifies a buy signal

Looking at the current price of GRT, there is a big chance that we will see the graph GRT hit the $2 mark or at least $1.75

Conclusion

Both margin trading and leveraged tokens trading are both high profitable financial products when things go in the favour of the trader. However, it is always important pay attention to the high risk level involved in both margin trading and leveraged tokens trading. For my price prediction of GRT, after looking at the charts and doing a few technical analysis, there is a huge upside potential for GRT in the next week.