Best Ethereum Leverage Trading Platforms for Margin Trading

Ethereum Margin Trading: Leverage Your Trades

If you’re looking to discover everything that there is to know about Ethereum leverage trading, then you’ve come to the right place. As always, the experts at Bitstacker are on hand to help you out where it matters.

From running you through the basics to helping you to find the best platform, we aim to cover all bases. Additionally, we’ll also provide you with our top tips for trading Ethereum with leverage. So without further ado, let’s get started, shall we?

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An Introduction to crypto trading

Though initially snubbed by financial experts and at first pushed to the fringes, crypto trading is growing rapidly in popularity and becoming more widely accepted by the mainstream financial world and its commentators. While it does carry more risk, the potential for sharper and steeper profits is too much for many to resist.

Away from the financial world, crypto trading has been an attractive option for the past decade or so. Part of the appeal is that it’s accessible to everyone and that the market is open 24/7. You can access crypto trading anywhere and at any time of the day from your phone or laptop. You can check out our PrimeXBT review to find one of our top-rated crypto leverage trading platforms right now.

About Ethereum

Those still sitting outside of the crypto world will most probably know bitcoin as the most popular and widely-used coin – which is definitely true to say. However, Ethereum is the second most used coin in the world today and has a lot of potential to overtake bitcoin in the not-too-distant future. Though it’s best known for being an actual cryptocurrency, Ethereum is in fact a software program first and foremost.

Built on, and powered by, blockchain technology, the Ethereum platform could technically be used by anyone around the globe to create secured digital technology. Like most crypto platforms built on the blockchain, Ethereum is 100% decentralized, an element that is attributed to both the appeal and skepticism around cryptos in general.

The big advantage that Ethereum is thought to have over bitcoin is down to scalability. From the outset, the platform was created with the idea of being scalable in mind. This meant that the Ethereum token, known more commonly as ETH, has always been more prepared for daily use than bitcoin and many other crypto coins. It is for that reason that Ethereum has played a key role in the rise of NFTs. Throughout this article though, we’ll be focussing more specifically on Ethereum leverage trading.

Margin trading Ethereum – What is leverage?

As said above, the focus of this article is going to be on leveraged Ethereum trading. We therefore need to start off by tackling the question, what is leverage in crypto trading? In general, leverage is something that can be used to increase your exposure to the market by using borrowed funds. Essentially, this means that you can start off in a better position in the market without having to pay the full amount.

The leverage that is available with each trading platform is generally displayed in the form of a ratio, which shows how much your capital will be multiplied by when using the borrowed funds. For example, if you see a platform offering Ethereum or bitcoin trading with leverage up to 1:200, you will get 200 borrowed units for every one that you invest yourself. You can therefore essentially multiply your investment by 200.

When trading more traditional assets, like stocks, shares and CFDs, it’s not incredibly uncommon to see platforms offering leverage as high as 1:000. However, when it comes to crypto trading with leverage, the maximum ratio tends to be around 1:200. This is because all crypto markets, including Ethereum, are decentralized and therefore way more volatile. This is reflected in the large spikes and drops in value that Ethereum and other cryptos can take.

Margin trading and collateral

One question that we are often asked is if there is a difference between margin and leverage trading. The simple answer is no. If we were to use the traditional definitions, we could say that you require leverage in order to engage in margin trading. However, over time, “margin” and “leveraged” trading have become terms that essentially both define the same thing. One thing to be aware of though is the collateral that you will need to provide in order to borrow the funds required for leveraged trading.

How much you need to leave in your trading account or crypto wallet as collateral differs on each trading platform. Generally speaking, the bigger your position, the better your trading margin is. This means that you will require more collateral in monetary amounts, but less as a percentage.

What are the risks of Ethereum trading with leverage?

As leveraged trading gives you more exposure to the market, and therefore more trading power, it has the possibility to deliver higher profits. However, it also exposes you to much more risk as well. While it can potentially expose you to higher profits, the other side of the coin is naturally that it exposes you to more risks and potential losses. Even with leveraged trading on more stable assets, like stocks, shares or fiat currencies, margin trading is risky. When it comes to decentralized leverage trading on the likes of ETH, these risks are multiplied.

This is due to the fact that cryptocurrencies are volatile in nature already. As we said previously in this article, crypto traders and investors without leverage are already exposed to the potential sharp drops and sudden hikes in value that crypto can take. With leveraged trading, you are risking your collateral as well as your investment. If your market position falls, the trading platform could ask you to invest more funds as collateral. In the worst case, you risk all of your funds getting liquidated completely.

As you may already have guessed, trading bitcoin with leverage, or any other cryptocurrency, is not something that we would readily recommend for beginners. Even if you invest an amount that you can realistically afford to lose, we would recommend other avenues first if you are completely new to cryptocurrencies and/or trading. While we have explained the basics of how it works for you, margin trading is quite complex to fully understand, as well as risky.

We therefore recommend that new traders start off by simply buying and investing in Ethereum first and foremost. You can then move on to trading and finally leveraged trading – but the key thing is to manage how much you invest and to move at your own pace. It’s important to remember that more traders lose money than make it.

Is Ethereum leveraged trading halal? 

We’re often asked by our Muslim readers,is crypto leverage trading halal?”, and it’s a question that you can read a more detailed answer to right here at Bitstacker. While margin trading is prohibited by Sharia law, there are many Islamic experts who have made a case to the contrary. Essentially, it is a subject of much debate, but many believe all non-immoral trades to be halal. There is, however, the argument that leveraged trading may cross the line into gambling, depending on the mentality and motivation of the individual trader. Our recommendation is to look for a trading platform that offers 100% halal trading solutions, of which there are many.

How to find the best Ethereum leverage trading platform for you

While our experts do give their top recommended platforms for all types of trading, we’re well aware that every single trader is different. There are therefore a few things that you need to consider before it comes to finding a crypto leveraged trading platform that’s right for you. That’s why below we have provided you with the top five things that you should consider before choosing your ideal trading platform.

1. Your assets

While there are some platforms that will allow you to trade Ethereum with leverage while having a small percentage of collateral, some will have a flat-rate minimum requirement of assets that you must have in your crypto wallet or trading account. This can range into five and six figures on some platforms. While regular trading merely involves considering how much of your investment you are willing to risk losing, leveraged trading also involves risking your assets as well.

2. Leverage ratio

The leverage ratio that you are looking for is among one of the most important things that need to be considered when choosing a platform. If you are looking to minimize your risk exposure as much as possible, then you can settle for a trading platform that is offering fairly low leverage. If you are happy to balance the risk vs reward, then the highest leverage crypto trading platform possible will be the one for you.

3. Trading fees

It doesn’t matter how much volume you are looking to trade or how much investment and collateral you are willing to risk, we all want to find the lowest possible fees. However, it isn’t always as simple as finding the platform that claims to offer the lowest fees. There are different types of free structures to be aware of, each of which could benefit different types of traders. For example, if you’re a high-volume trader, then you will likely favor a platform that offers a tiered fee system, whereby you pay less the more you trade. If you’re a low-volume trader, then a platform offering the lowest flat rate to all traders might be better.

4. Your jurisdiction

Depending on where you are trading from, there are certain platforms that may not be available. Additionally, the laws where you are might mean that a platform’s leveraged Ethereum trading capabilities may not be available to you. Then you also have to consider the fact that local laws might make margin trading conditions a more risky option for you. Be sure to read up on the cryptocurrency trading laws in your country before choosing a platform.

5. Time limits

Leveraged trading isn’t something that is considered a long-term investment – it’s short, snappy, and of course risky. Most trading platforms will therefore impose a limit on the time that you can hold your market position. Generally speaking, this will be between 30 and 60 days, though could be longer with some platforms. The time limits for holding your position could also be affected by other things, including your trading volume and collateral.

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Our top five tips for Ethereum trading with leverage

Leveraged trading with Ethereum or any other crypto asset definitely isn’t for the faint-hearted. It’s a risky form of trading that isn’t one for beginners but is also one that does have the potential for high profits as well. Below, we’ve provided you with our experts’ top tips to help you to manage the risks of leveraged trading and to have the best trading experience possible.

Risk management

As we’ve said repeatedly throughout this article, leveraged trading is very risky, something that is amplified by the fact we are talking about a cryptocurrency as well. It’s therefore vitally important that you manage your risk as much as possible, which can be done in a number of different ways, some of which will be covered in the following points.

Investment

When it comes to trading anything, our advice is always not to invest more than you can realistically afford to lose. However, with margin trading, there’s also the collateral to be considered. Make sure that the leverage you are using doesn’t require you to stump up more of your assets than you are comfortable with.

Leverage

Especially if you are engaging in leveraged trading for the first time, it’s important to remember that you are in no way obliged to make use of the maximum amount available with most trading platforms. We therefore recommend starting low, at least at first. Although this does mean less potential profit, it also reduces the amount of collateral required and therefore also reduces your risk of having to liquidate your assets.

Stop-loss

Stop-loss is a function that allows you to automatically close your position when the price reaches a specific level. This can be used both to cash out at the right time when in profit or to manage your potential losses. Either way, it is one of the best ways to manage your overall risk with margin trading.

Understand Ethereum

We’ve devoted the majority of this article to understanding the concept of leveraged trading and how it works. However, it’s important to remind ourselves that we are talking specifically about trading Ethereum with leverage as well. It’s therefore also vitally important that you understand Ethereum and how it works before you start trading.

Margin trading Ethereum – The conclusion

We’ve almost reached the end of our guide to Ethereum leveraged trading and finding the best operators. The time has now come for us to summarize the main ideas that we’ve covered throughout. The most important thing to be aware of is that margin trading is a two-sided coin that offers high risk vs high reward in almost equal measure. Just remember to refer to our top tips in order to manage your risk as much as possible and don’t risk more of your capital than you can realistically afford to lose.

Ethereum leverage trading FAQ

📈 How do you leverage trade Ethereum?

First of all, we should inform you that leveraged trading can be risky and definitely isn’t something that we would readily recommend for beginners. However, it does also have the potential for good profits if done well. A full guide to leveraged trading with Ethereum can be found right here at Bitstacker.com.

❓ Can you trade Ethereum on margin?

Margin trading, sometimes known as leverage trading, involves using borrowed funds to increase your market position. It is popular among traders with the likes of stocks, DFDs and fiat currencies, but is it possible with Ethereum and other cryptocurrencies? Follow the link to our Bybit review to find out.

🏆 What is the best Ethereum trading platform?

Ethereum is behind only bitcoin as the most widely used and traded cryptocurrency. Additionally, many experts think that it actually has the potential to overtake bitcoin and become the world’s leading crypto in the coming years. It can therefore be traded on the majority of crypto trading platforms in the world today. Which one is best? See what the experts here at Bitstacker.com think.

📍 Where can I leverage trade ETH?

There are plenty of places to leverage trade ETH and other cryptos right now, depending on your location in the world of course. For a complete list of the best leveraged ETH trading platforms where you are, we recommend visiting our site here at Bitstacker.com. Our information has been created by experts and is always up to date.

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