Steemit Crypto Academy Season 2 Week 12: Homework Task for @stream4u and Submitted by @meymeyshops//3rd May/2021

It's another opportunity to be in your class dear Prof. @stream4u. I hereby submit my entry for this week's assignment written according to my understanding and in my own words.

What Is Crypto Margin Trading?

If as a crypto trader I have $100 but I borrowed more fund say $50 from my Exchange to increase my buying potential, it means I am trading on margin. This is trading on lent fund with the intention to magnify my anticipated profits. But the truth here is that to magnify such profit, the market must move to my desired direction either uptrend or downtrend otherwise my loss may be as great as the anticipated profit or even more. It's good to note that this kind of trading comes with a higher interest rate which is determined by the exchange providing the Margin trade.

How To Plan For Trading In Crypto Margin Trading

There is usually the adage that says "look before you leap". This equally applies to Margin trading, one must learn some certain rules before venturing into Margin Trading because of its being high risk venture. Understanding the following indices will put one on a better edge:

Step 1:

Provide your initial deposit: Understand that the initial deposit serves as a collateral for the margin trade and will be released only if the trade is successful otherwise the initial deposit would be lost. It is advisable to start small instead of making it big.

Step 2:

Open the trade position: Go for a long position if you anticipate that there will be an upward trend where price will increase and profits will be maximized. Or go for the short position if you predict a fall in price.

Step 3:

Have a set goal and apply some technical tools such as Support and Resistance levels; Exit routes and Stoploss.

Step 4:

Choose the asset you have learnt its movements overtime as well as its interest rates. Then make room for unforeseen occurrences such as sudden price changes due to a hack or some regulatory changes and be patient.

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

There are a good number of Crypto Exchanges in this list, some are as followers

• Bybit offers up to 100x margin trade, they provide margin on BTC, XRP, ETH, EOS, USDT. They also provides $90 joining bonus for newbies.
• Binance: Almost everyone prefers this platform for daily trading, This platform offers **isolated margin trade and cross margin trade with a 10x leverage on Bitcoin.
• Bitmex: This also offers both isolated and cross margin trade services on Bitcoin and manages liquidation using ADL mechanism. Its services is for 6 cryptocurrencies including Bitcoin, Litecoin, Cardona, Eth, Bitcoin Cash.

What Is Leveraged Tokens Trading?

These are ERC-20 tokens that allow you to make of use borrowed fund for investment purposes without passing through collateral or interest rates or other charges. Just like other tokens, you have custodial to leverage tokens, can move them to and from your wallets.

One common thing about leverage tokens is that they have 3x to 100x exposure to market prices depending on the exchange providing the service. For instance if the price of Bitcoin increases with 1%, the Bitcoin Bull token on long exposure, will increase 3x, if price moves down 1%, the Bitcoin Bull decreases 3x. On the other hand, Bitcoin Bear representing the short exposure moves in the opposite way with price changes. If Bitcoin price moves up with 1% increase, the Bear token will move down 3x, but if it moves down 1%, the token goes up 3x.

See examples of Leverage tokens with 3x positions below:

Image source

Now as the image above shows, when you open a leverage position with a deposit of say $200, the account will automatically become $600 for the trade.

How To Plan For Trading In Leveraged Tokens?

One who fails to plan, plan to fail, is a known adage geared toward motivating one to set up adequate plan for every venture and now for trading leveraged tokens. The following indices can help:

• Study the market well and understand the historical volatility of various tokens. Some tokens have high volatility whereas some have low volatility. It will be a blunder to trade BTC and EOS same way rather find out which asset suits your trading capital.
• Timing is of utmost important. Since leverage tokens perform thrive in trending market it is therefore imperative to follow the asset trend. But applying some technical indicators like simple moving average will enable me to know or see when there is a price breakout and then make my entry either for up or down trend.
• Do not plan to hold leverage tokens, they are a short-term trade because of price volatility so should be traded on a single day.
• Apply Stoploss indicator and write down your parameters for exits and entries.

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

• BitFinex is one of the oldest leverage token exchange, it offers up to x10 leverage and its provisions are margin and futures trades

• FTX is also a good leverage trading exchange offering up x101 with products of margin trading, leverage token trading, futures trading and volatility assets.

• Binance: The most preferred cryptocurrency exchange. It offers x125 leverage and products ranges are margin trading and futures trading.

• Kraken said to be for big whales in cryptocurrency trading, it provides leverage just up to x5 with margin and future trades.

• Poloniex is trades leverage tokens but not for newbies rather for experienced traders. It gives up to x100 leverage in margin trade and future trades.

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.).

Today being 4th May, 2021 from my reading and watching the fluctuating movement of BTC/USD prices on Binance chart, my prediction for the next week is as follows:

Image source

From the above image, BTC is at $56,339.97 at the resistant level. This means a possibility that the trending price will keep on going up on the Bullish side.

Image source

The second image still shows a move a bit above the resistant level in a Bullish behaviour as price has increased with some margin set at $56,344.00.

Image source

Whereas at this point, there is a significant increase in the price from $56,344 up to $56,367.20. that is by 0.23%

The reading from above images depicts a trend towards a Bullish behaviour, it therefore stands to reason that from the 9th of May the BTC/USD price is going to see a significant increase from $56,367.20 to above $56,500.97.

Conclusion

I sincerely appreciate this week's lecture and task give therein. Margin trading is not for inexperienced crypto traders but for experienced ones. But even with such experience they should trade with caution and applies technical indicators to enable them succeed. Noteworthy it is that traders should know risk aversion before diving into this delicate trade, they should start small and grow big.

Thank you my prof @stream4u.

I remain yours loyal student,
@meymeyshops.

CC: @stephenkendal
@whitestallion
@gbenga
@bright-obias
@focusnow

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