Hello Steemians, I'm happy to be here again in the 12th week of Steemit Crypto Academy. Despite being in the cryptocurrency industry for 3 years, the academy has opened my eyes to background knowledge about cryptocurrency industry on things I did not know. Today's lesson was delivered by professor @stream4u on crypto margin trading and crypto leverage token trading. Professor @stream4u did great in making the lesson informative and I'm here to present my homework task.

What is Crypto Margin Trading?

Source

When we talk about cryptocurrency margin trading, we talk about having more purchasing power than your capital. Cryptocurrency margin trading let you trade with borrowed funds provided by a third party probably an exchange or other traders. This enables a trader to have access to a greater sum of capital to open positions. With margin trading, a trader can take advantage of having greater capital to make more profits when his prediction is correct. Similarly, the losses incurred when the trade goes against margin trading are also big as the trader has to pay off the loan he borrowed to purchase the asset.

How margin trading works

When trading opens a position using a margin account, this means he has borrowed money from the exchange or other traders to open a trade. Therefore, he needs to need to put down part of the total value of the asset which serves as collateral to the borrowed funds.
Let's take for example, you purchased $1000 worth of STEEM with only $100 meaning you have borrowed $900 to initiate the trade (900% by leveraging 10:1 or 10x). You need to repay the loan of $900 plus the fees attached to it. Your assets serve as collateral to the borrowed loan which the exchange will sell to pay back the loan and cover-up losses when the trade goes drastically against your prediction. So this means you need to have enough money to cover up your losses and keep your position up, if not, the exchange will be forced to liquidate your position by closing it automatically.

Advantages of crypto currency margin trading

Margin trading is beneficial to traders who want to capitalize on the advantage using borrowed capital to make more money. Some of the advantages of margin trading include:

• It results in bigger profit due to having more purchasing power to open a trade with little funds.
• Margin trading allows a trader to diversify his positions into different assets with a little number of funds.
• Margin trading gives you more access to funds.

Disadvantages of Margin trading

Crypto currency itself is very risky due to high volatile nature of the market. Similarly, margin trading is risky and this makes cryptocurrency margin trading a no-go area for anyone without any experience of trading. The most obvious disadvantage of cryptocurrency margin trading is that it can lead to huge losses that are even greater than your initial investment when the trade goes against your prediction.

How to plan for Trading in Crypto Margin Trading?

Trading cryptocurrency is very risky and it is not something anyone can embark on with proper planning, talk more of crypto margin trading. It's just like going to the war without any tactics or edge over your enemy. Here I will highlight how a trader can plan in crypto margin trading.

• Have a trading strategy that you have tested and have confidence in. This will include an entry plan, exit plan, and proper risk management.
• Always start small and increase your leverage progressively if you are new to crypto margin trading. This can give you time to understand how the system works and also save you from huge losses.
• Always use stop-losses in every trade and avoid psychology stops. Crypto is very volatile and any change can happen very fast. Stop losses helps you to protect your capital when the trade goes against your prediction. Stop losses protect you by closing your position on time at a minimal loss.
• Always carry out fundamental analysis and technical analysis to predict the future price of an asset. This can help you plan when to exit the market and also where to set your stop-losses and take profits.
• Crypto margin trading is not a passive investment where you stake your funds and it generates profit without your presence. Always be there to monitor your positions during crypto margin trading to react to unexpected changes that might occur in the market due to high volatility.
• Always be patient and don't rush when the market the price of an asset is pumping. Some cryptocurrencies are susceptible to pump and dump which can cause huge losses. Always trust your technical analysis and fundamental analysis before opening a position.
• Always be proactive in taking profits when you can and also close your positions when you notice your prediction is wrong. Do not be greedy to sit on a position when there's every indication that there is a reversal.

Crypto Exchanges name that provides margin trading service and what margin they provide?

Cryptocurrency markets normally use the 'X' terminology for margin trading. This can be 2x, 5x, 10x, 50x, 100x etc. Below are some other crypto exchanges that provide margin trading services and what margin they provide.

Binance:

Binance offers margin trading to users who have verified KYC and whose country isn't blacklisted in Binance. Binance offers up to 3x for cross margin and up to 10x for isolated margin.

Bybit:

Bytbit is another cryptocurrency exchange that provides margin trading service. Bybit offers traders a maximum of 100x margin for both cross margin and isolated margin and this is adjustable for cross-margin.

BitMEX

BitMEX is another cryptocurrency that offers up to 100x margin of some of the cryptocurrency listed on the exchange.

Houbi

Houbi is another crypto exchange that offers trading on margin. Houbi offers a maximum of 5x margin on cross margin, isolated margin, and C2C (Customer to customer) margin trading.

Kraken

Kraken is another exchange that provides margin trading service and the margin pools contain 23 cryptocurrencies and 4 fiat currencies. Kraken offers up to 100x margin but depends on the verification level of the user.

BitFinex

Bitfinex offers up to 10x margin to its users and the funds are generated from its peer to peer liquidity provider platform.

Poloniex

Poloniex exchange offers up to 2.5x margin on currencies margin trading is enabled. Users are required to create a margin account in Poloniex and transfer the supported cryptocurrency to their margin account for margin trading.

Summary of Crypto Exchanges and margin they provide

Crypto Exchange	Margin Provided
Binance	3x for cross margin and 5x for isolated margin
Bybit	100x for both cross margin and isolated margin
BitMEX	100x for both cross margin and isolated margin
Houbi	5x margin on isolated margin, cross margin, and C2C margin trading
Kraken	100x for both cross margin and isolated margin trading
Bitfinex	10x for both isolated and cross margin trading
Poloniex	2.5x on both cross margin and isolated margin trading

What is leveraged Tokens Trading?

Leverage token trading involves trading cryptocurrency which gives you leverage exposure without the risk of liquidation 1. A trader makes profits in leverage token trading by predicting the direction of the market either long position or short position. Leverage token trading differs from leverage trading in the sense that there's no risk of liquidation as no collateral was put down on the position.
Crypto exchanges have their orientation which may be either BTCUP for the price of BTC to rise or BTCBDOWN for the price of BTC to fall. Similarly, in some exchanges, you will see BTCBEAR for the price of BTC to fall and BTCBULL for the price of BTC to rise. A leverage token trader predicts the direction of the price on leveraged products and makes huge profits when the price goes in his favor. Also, the losses in leverage token trading are huge when a trader predicts wrongly.

How to plan for leverage trading tokens?

Leverage token trading can make you more money than spot trading. Similarly, you can also lose more money when your prediction is wrong. Here are few plans for trading leverage tokens.

• Leverage token trading involves predicting correctly the direction of the market, this means you have to be well-grounded in technical and fundamental analysis to predict correctly.
• Do not over trade by opening more positions as this can cause huge losses when the trade goes against you.
• Trading requires you to have a strategy. Developing a trading plan can enable you to have a good entry position and exit position.
• Do not have a long-term plan for a leverage token as leverage tokens are rebalanced and have variable leverage daily.
• Always close your losing trades and never let losing trades run. Some traders make the mistake of leaving a losing trade run with the hope that the market will reverse. Trading leverage tokens come with unpredictable changes due to the volatility of the market.

Crypto Exchanges Name that provides leveraged token service and what margin they provide?

Crypto Exchange	Margin Provided
Binance	Provides Variable margin between 1.23x - 4x
Pionex	Provides 3x margin
BitMEX	Provides 3x margin
FTX	Provides 3x margin
Kucoin	Provides 3x margin

Price Forcast For Crypto Assets XXXXXX. (This is a similar question from the 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 for next week.).

No matter the kind of trader you are, whether a spot trader, margin trader, Leveraged token trader, etc, all of them requires a price forecast to make a trading decision. Similarly, being able to predict the future price of the market using technical analysis is a big plus because you have graphical information on the price movement of the asset.
I will perform a price forecast using technical analysis on BTC/USD using price action, candlestick analysis, chart patterns, multi-timeframe analysis, and moving average indicator to predict the future price of BTC/USD. Since we will be predicting the price of BTC/USD for the next one week, we will using the higher timeframe ( Weekly chart, Daily chart) to get a better forecast and cancel out noise on the lower timeframes.

_{BTC/USD Weekly Chart}

The chart above shows the weekly chart of BTC/USD and from what we are seeing, BTC has been in an uptrend since the 19th of October 2020 breaking its previous all-time high at $19K. Since then, we have seen a strong uptrend with the higher high formation with a new all-time high at $64K. After the formation of the all-time high, price formed resistance at $61K which was tested but rejected. Currently, we had a strong bullish candle after last week's close but it failed to engulf the bearish candle. If this current weekly candle closes bullish, we might see BTC continue its uptrend. Let's go down to the daily chart and see what we have there.

_{BTC/USD Daily Chart}

On the daily chart, we can see higher high formations which shows a strong bullish rally in the price of BTC, and also the price has been trading above the 200-day moving average which is also signaling an uptrend.

_{BTC/USD Daily Chart}

From what we can see in the chart above, the uptrend in BTC that started on 20th October last year is getting weak as prices have created a strong resistance level and have failed to create a new high. Similarly, we can see price break out an ascending channel which signals a reversal in the price of BTC/USD. But we cant confirm the reversal as the price is still ranging at the resistance zone.
Currently, there are two possible outcomes of BTC/USD price in the next one week which depends on what happens at the resistance. The first outcome is explained using the chart below.

_{BTC/USD Daily Chart}

The first possible outcome is to see the BTC/USD price retest the resistance and reject it. If this should happen, we will a downward movement of BTC/USD to the support at $44.4K. if we see a rejection at the resistance, a good sell position will be after a bearish engulfing candle with stop-loss above the resistance and take profit at the next support.

_{BTC/USD Daily Chart}

The chart above shows the second possible scenario. If BTC breaks this resistance zone before the end of this week, we can see a continuation of the uptrend. After entry will be after the formation of a bullish engulfing candle pattern after break and retest of the resistance as shown in the chart using the arrow. Stoploss will be placed below resistance and the take profit will be based on a trader's exit strategy since theres no resistance to target. I normally use a 1:4 or 1:5 risk-reward ratio for my trades.

In conclusion, cryptocurrency is very risky and trading with margin is riskier. Traders tend to ignore the risks associated with margin trading and focus on the benefits. Trading with margin is made for professional traders who understand the risks and what it takes to trade with margin. Similarly, trading requires a strategy and plan to make trading decisions. Furthermore, trading is a game of patience. You have your strategy, you have made your analysis and you have predicted the price of an asset, be patients and wait for your forecast to play out before opening a position.

Note: All the charts used in this post are screenshots taking from my Tradingview page.

Thank you professor @stream4u for this wonderful lesson you provided on Crypto margin trading and Crypto leveraged token trading.