Steemit Crypto Academy | Course By @stream4u - Crypto Margin Trading & Crypto Leveraged Tokens Trading //Homework done by @xkool24

Hello everyone, good to be participating in this week’s homework task by Prof @stream4u on Crypto Margin Trading and Crypto Leveraged Tokens Trading. It was well impactful and I already set to be engaged immediately on its homework task.

HOMEWORK TASK

What is Crypto Margin Trading?

In Man's everyday activities even before the advent and borne of cryptocurrency trading, borrowing and lending (seen in the form of loan) has played an integral part of man's life whose aim is always geared towards better-life and profiteering. In the case of Crypto Margin Trading, this is simply an act of getting loan from third party agents especially from the exchange platform to increase staking capital, and hence using it as leverage while trading due to its enlarged capital/investment for better profits.

For example, if User-A gets into trade with $1,000 and applied for 5x leverage which invariably gives him more $4,000 to his initial $1,000 now amounting to $5,000. This enables him to have more stakes while trading. This not only just exposes him into getting more profits but also losses too. If the trades ends in 5% profit/loss, he makes 5% x 5x = 25% profits/loss. This means he makes either an additional 25% profit of the $5,000 invested or 25% loss of the $5,000 used in trade. Margin Trading is a double edge sword which either makes a trader better off or worse off. Also remember that the user pays commission or interest in either ways the market goes to the exchange platform. This kind of trade isn't for amateur or newbies who just joined the crypto trading platform.

These are the Key highlights of Crypto Margin Trading

• There is a user who feels getting more investment and engaging the trade is best of a strategy for him.
• This kind of a trade involves multiple sources of profits or losses. There are high potentials seen in either ways.
• Commission/ Interest are paid to the exchange after trade expiration.
• There are minimum requirement to be met before loan is granted users who want to trade.

For example, just like what we see in the JustLend, Traders are limited within 0-75% usage threshold of whatever it supplied into the supply pool. But firstly, a supply needed to be made in this case before access to loan is open for the trader. So therefore, there are pre-qualified conditions required by an investor before loans are granted.
There are two basic types of Margin trading seen in the cryptocurrency margin trading.

• Isolated Margin Trading: Positions in this type of trading are distributed/separated in different sub accounts. It is mainly advised for new entrance into the margin trading platforms. It is a little less risky as losses that affects your positions entered only have an effect on the individual position, hence does not affect the main margin account. Losses are contained in this type of trading.
• Cross Margin Trading : Unlike what is seen in the Isolated Margins Trading, Cross margin positions staked, are all derived from the main margin account. It is usually seen to be used by experienced traders. Losses or profits made in this trading tool directly affects all positions entered.

How to plan for Trading in Crypto Margin Trading

There are different trading strategies by different investors/traders applied during trading, but all of them are geared towards a common goal which is making profits. For me, I have come to see that all these strategies are categorized into knowing some of the key factors which always play first hand role before engaging the trade. They include self/Personal rules, Trade rules, Experience level, asset information/analysis etc.

• Firstly, every trader has to set out and outline guided rules before taking any form of engaging the trade. This is very important to avoid going outside set radar in the course of trading. Outlined rules ensure that traders are in form and also serve as a means of reminder of the Dos and Don'ts.
• Every trader always knows which asset to engage, hence there is a need to carry out market analysis to determine its fundamental, sentimental and technical analysis. It helps in preparing and giving a level of confidence boost to trader before making any move.
• I should be able to look out for exchanges with lower fees to help minimize deductions made on profits. This is also importance in cutting down cost accrued in third party charges.
• I should be knowledgeable to determine my Entry and Exit in a trade. It is easier to make an entry into a trade, but the ball of contention is when exactly to Exit the trade. This is very important and should be improved on.
• Make sure you categorically state your risk level rate. This might be done either on daily, weekly or monthly basis. As soon as this is attended, trader should exit the market to avoid more loss of assets. It is paramount to know that, this particular strategy puts our emotions in check to prevent us from trading with emotions/sentiments.
• Just as mentioned, setting our risk level rate daily/weekly/monthly is important hence we should be able to know our risk aversion. Are we the conservative, moderate or aggressive risk aversion type? That has to be determined and worked accordingly.

Crypto Exchange Name that provide margin trading service and what margin they provide.

• Binance Exchange is the biggest exchange platform right now, with offerings seen in both the isolated and cross margins trading with a leverage upto 10x
• Bityard is also another exchange platform with presence in few countries that are seen to major in the isolated margin trading offers with leverage of upto 125x
• Poloniex is a high liquidity exchange platform with base in Seychelles with upto 100x leverage in margin trading
• BitMEX with majors in Bitcoin margin trading also play key role in both margin and cross margin trading with upto 100x leverage in margin trading.
• PrimeXBT is seen as a versatile platform with activities in the FX, Commodity and index for Margin trading with leverage offers of upto 1000x for FX.
• Kraken with majors seen in the cross margin trading with offers upto 5x. It is a US based exchange with competitive fees.
  

What is Leveraged Tokens Trading?

Firstly, Leveraged Tokens are ERC-20 tokens that give the trader a leveraged position to a cryptocurrency price without necessarily taking into cognizance the risk of liquidation, management of collateral and margins and hence which improves the profits that can be gotten from the leveraged assets. These tokens are not designed for future purposes as they undergo quicker buying and selling of tokens, hence they are not for HODING. This may be connected to its daily re-balancing of token. Re-balancing in leveraged tokens is seen to happen after when the spot market price changes by 10%.

Benefits of Leveraged Tokens

• Allows you to take good advantage of market of fluctuations/volatility
• They offer leveraged exposure in trade without the usual management of other key factors. Factors like managing risk of liquidation, collateral and margin trading
• It provides more profit and reduces risk of complete liquidation of investor’s assets during bearish trends. It allows for automatic reinvestment of assets/profits during downtrends which diverts risks of assets liquidation.

Demerits

• They are highly risky products and should not be recommended for beginners.
• It does not encourage HODL/HOLDING and not for long term trades.
• Transparency seen in this kind of trade and token is solely dependent on the exchange platform. Hence one needs to be sure of an exchange to be used before engaging any.

How to plan for Trading in Leveraged Tokens

• They are short term trades that require me to be very strategic in penciling down my Entry and Exit Behavior. This is very key so as to reap from little price changes seen in trade.
• Taking into cognizance my risk aversion level. This would determine how much I have the capacity to invest and probably loose should in-case market go south. So there should be a risk level set aside to serve as a guide
• Make good analyses of the asset in mind. This would help in knowing the fundamental, sentimental and technical perspective of this asset which in turn gives a direction.
• Try to select the best of exchange which offers less fees / interest rates. This would help reduce amount taken back after profits are made by this exchange.
• Avoid trading with sentiment maybe in a bit recover lost grounds; this may also result to more dips and over trading which may be catastrophe.

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

• BINANCE Exchange offers Leveraged Tokens Service with a variable leverage between 1.25x to 4x

• FTX was seen to be the first to Introduce leveraged token with offer up to 3x

• Pionex is also another platform that offers Leveraged Tokens up to 3x. They are seen to offer high leverage with an optimized re-balancing mechanism in place

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.).

(Image 1)

This is the BTC/USDT chart for this moment showing some price gain and re-bounce after some bearish trends last month. From the present chart, we can see an UPTREND with different supports as indicated.

It's is so obvious that steep Uptrend from the charts. This was one weeks chart for the BTC/USDT which if any investor who made an entry when it was beerish should already be smiling with the uptrends seen with market price valued at $58,719.99 against the $48k seen previously.

The higher Bollinger line is seen to be at $70k and the middle bollinger line at $46k. This invariably gives prospects to the trader or investor that there are profits margins to be made in the next few days, given to the continued bullish trends seen.

The forecast here guarantees a potential rise of price within the next one week given to the bullish trend already seen expecially from image3. There's a likelihood that price.may break through $60k Price resistance level.

In conclusion, in as much traders would want make out the best of their trade by leveraging on little price changes in trade, it I also important to know that both margin trading and leveraged token trading are risky trading tools.but with high potential of ROI. There should be guided principles each investor should take into cognizance and adhere to, to see that the negative risk potentials are reduced.

Thank you Prof @stream4u, this is my entry for homework task for this week.