Crypto Academy Week 12 | Homework Post for @stream4u | Crypto Margin Trading & Crypto Leveraged Tokens Trading
Introduction
It's an honour to be back at the academy to learn once more this week, and the lecture from professor @stream4u was the one I've attended this time which with no doubt, was an awesome one. The professor gave a task and this article would be used to get it solved.
What Is Crypto Margin Trading?
Crypto Margin Trading is a type of crypto investment/trading that allow users to have access to a bigger capital by borrowing from other traders or from the exchange that offers the margin trading or even brokers. In this case, traders are exposed to a bigger capital that they are unable to raise on their own and open ways for them to make bigger profits.
Crypto margin trading has the advantage of exposing traders to a big market and maximize the profit from it. Crypto margin is often offered in 3x, 5x, 10x or bigger ones thereby allowing a trader with an initial capital of 30 USD to access a market up to 90 USD in a case of 3x, also allowing the trader with an initial capital of 30 USD to access a market up to 150 USD in a case of 5x margin trading and an access up to 300 USD market in a case of 10x margin trading offered by an exchange.
Advantages of Crypto Margin Trading
- Crypto margin trading allow traders to have access to bigger capital that they can't provide on their own to make good profit from the crypto market.
- It allow traders to buy multiple positions with their little capital to maximize their chances of making profit through margin trading from the crypto market
- Traders are allowed to borrow assets they cannot ordinarily provide on their own.
Disadvantages of Crypto Margin Trading
- As much as profits from crypto margin trading is high so as the losses could be if the position goes wrong.
- Crypto margin trading is classified as a high risk investment.
- An account tend to face liquidation if the losses is bigger than the available asset balance of the trader.
How To Plan For Trading In Crypto Margin Trading.
Planning is important in cryptocurrency trading and the crypto margin trading is not an exception, so it is advised that a trader should be sure of the trend of an asset price behaviour before entering such trade. Note that, crypto margin trading is classified as a highly risky investment and traders should consider opening multiple positions that earns them quick profit and not get too greedy by opening a position with high profit as that can turn to be a loss in the long run.
A trader should consider using the chart pattern at 5 or 15 minutes time frame to plan an intraday crypto margin investment to take quick profit and stay safe. The screenshot below will show how the 15mins time frame chart pattern is used to plan a crypto margin trading using the BNB/USD pair (explored from TradingView).
BNB/USD pair- Plan for a margin trading
From the screenshot above, two supports were caught at 573 USD and I used the second support for my buy position. In a short while, the asset price rises to hit the resistance line 602 USD which was projected as my first profit level and there was a slight trend reversal (downtrend) but later went uptrend to hit the second profit level, which is 611 USD. The chart pattern was used to plan a crypto margin trading in a 15mins time frame.
Crypto Exchanges Name That Provide Margin Trading Service and What Margin They Provide?
Crypto exchanges that offers margin trading- Names and margin type
| Exchange | Margin |
|---|---|
| Binance | Cross and Isolated margin (up to 10x) |
| Bybit | Cross and Isolated margin (up to 100x) |
| Huobi | Cross, Isolated and C2C (customer to customer) margin with maximum 5x. |
| BitMex | Cross and Isolated margin (up to 100x) |
| Poloniex | Cross and Isolated margin (up to 5x) |
| Deribit | Cross and Isolated margin (up to 100x) |
What Is Leveraged Tokens Trading
Leveraged tokens trading is the trading type whereby traders don't have to own the asset but rather enter a contract with an exchange that offers trading of leveraged tokens to buy a position. The position could be long (buy) or short (sell) and takes profit if the trend of entry is right.
In this type of trading, the trader only have to predict the trend of the asset, uptrend or downtrend and open a position. For example, if a trader enters a long position in a leveraged tokens trading with 10 USD at a margin of 3x and the asset moved uptrend as predicted then, the trader initial investment would turn to be 30 USD.
Advantages of Leveraged Tokens Trading
- It allow traders to trade on an underlying asset which they don't have to own before trading it.
- It enable traders to take advantage of both bullish and bearish market, as traders can choose to open a long or short position.
- It exposes users to earn reasonable profits from the market.
Disadvantages of Leveraged Tokens Trading
- This is also a risky investment, as such traders should be aware of the risk involved.
- There can be huge loss if the position opened at the beginning of the contract goes wrong.
- Risk of crypto account liquidation if the position of entry failed.
How To Plan For Trading In Leveraged Tokens?
Proper planning is required before entering a leveraged tokens trading, the trader should be very sure of the asset's trend before opening a position, be aware of the risks involved in this type of crypto trading, be contented with small profits to avoid running into loss because of greediness, the fees that are involved and should consider using the chart pattern to properly utilize the support and resistance to make a good decision as regards opening a position in a leveraged tokens trading. The screenshot below would show the analysis on BNBUP/USDT.
BNBUP/USDT pair- Long position
From the chart above, I marked a support around 1980 USDT to open a long position in a leveraged tokens trading and the asset's price behaviour was bullish as predicted and it attained around 2000 USDT before facing a resistance which was corrected in a short while (trend reversal). This is a perfect long position if entered.
Crypto Exchanges Name That Provide Leveraged Tokens Service and What Margin They Provide In Leveraged Tokens?
| Exchanges | Margin |
|---|---|
| Binance | Up to 4x leverage |
| Pionex | Up to 4.8x leverage |
| FTX | Up to 3x leverage for BULL and up to -3x leverage for BEAR |
| Coinbase | Up to 3x leverage |
Price Forcast For Crypto Assets XXXXXX. (This is similar question from last course, take any Crypto Assets Chart graph, as per its current price and its market trend predict its future price for only next week, what will be its future price for next 1 week.You can predict for any direction up or down but explain it properly on what basis you have predicted the price. What will be the possible low level and high level fornext week.).
Remember, price forecasting in crypto ecosystem means the prediction of the price of an asset in the nearest future through the price history of the asset. And for this purpose, I will be exploring the BTC/USD to make a price forecast of the asset's price in the next one week.
Resistance around 57,551 USD
The screenshot revealed a reoccurring resistance of the asset BTC/USD at the price 57,551 USD with a tendency of a price breakout at the moment. The price breakout isn't clear yet but there is tendency that there would be a breakout. Now I have two options, price breakout and the resistance persist to experience a trend reversal.
Support around 48,000 USD
From the screenshot above, two supports were caught earlier at around 48,000 such that if the present situation of Bitcoin experiences trend reversal, and touches 48,000 USD then that would be a strong support for buy as the asset would experience trend reversal (uptrend) there. Let's continue.
Next Stop
In conclusion on this, I remain optimistic about the price breakout at the current price (57,551 USD) and the next stop for Bitcoin in the next one week is projected at the resistance marked around 63,700 USD which was Bitcoin's all time high, and possibly, there could be a price breakout in the next one week to create a new all time high for Bitcoin.
In conclusion, crypto margin trading and leveraged tokens trading gives traders access to big markets where they can take reasonable profits yet proper care must be taken in the process, getting all information about the trading type, be sure of the investment before opening a position, use a risk capital for the trade and not get too greedy in the process so as to be safe in the trading. Thanks to professor @stream4u for this great and interesting lecture. Thank you all.
Cc: @stream4u
Written by; @fredquantum
Hi @fredquantum
Thank you for joining The Steemit Crypto Academy Courses and participated in the Week 10 Homework Task.
Your Week 10 Homework Task verification has been done by @Stream4u, hope you have enjoyed and learned something new.
Thank You.
@stream4u
Crypto Professors : Steemit Crypto Academy
It's an honour to attend your lecture, professor. I appreciate your kind review professor @stream4u and I look forward to learning from you subsequently. Thank you.