For those who are the limited amount of crypto resources, that is Bitcoin and Altcoin, there is an option available for you named margin trading to add leverage to your investment. This is to increase the amount you have invested without having actually to hold the assets. This is very important to say that margin trading is somehow not recommended for everyone and also contain the high amount of risk involved, especially if you are looking to earn free bitcoin.
Let’s start: What is Margin Trading?
Margin trading is possible because of the presence of the lending market. Here, lenders offer loans to the traders and the traders can further invest a large number of coins and lender is benefited from the interest on the loans. Also, some exchanges also provide its users with the loan to be used against the margin market.
For example, An exchange can lend their bitcoins- how to get free bitcoins and altcoins to anyone and can avail the benefit in return from the interest on the loan. Well, this major disadvantage here is that the coins are required to be in the wallet of the exchange, which is a comparatively less safe than a cold wallet.
Costs and risks involved in margin trading
We have mentioned above, the cost of the margin includes that you need to pay the interest on the coins you have borrowed and the fees for opening a position with the other uses or exchange. Also, as the chance to earn huge amount also increase, and so does the risk.
If you are planning to invest for cryptocurrency always keep yourself aware of the risk to lose the entire amount involved.
Exchanges that allow margin trading
It is now possible to trade margin on several exchanges. The benefits of leveraged trading are very clear and the other advantage is the security aspect. When talking about crypto traders then they must strive to minimize the number of coins that they tend to hold on exchanges. Also, the exchanges must also consider hot targets for the hackers as in recent years there has been a number of hacking of exchanges.