The recent Bitcoin bloodbath and chaos across the crypto market shows us again and again why simply buying and HODLing is often the most painful yet recommended approach. The reason for crypto veterans to suggest newcomers do nothing but HODL is, so they have someone to sell to. The thing investors often get stuck and end up holding are someone else’s bags.
The better alternative is trading. Spot trading is one method, but a more profitable albeit riskier strategy is to trade on margin using PrimeXBT. In this guide, we present the pros and cons of utilizing margin trading as a primary trading strategy. We will also provide several tips to help take advantage of leverage and how to do so while keeping risk to a minimum.
Margin Trading And Leverage Versus Buy And HODL
Margin and leverage are the bread and butter of the professional trading world. With these two tools, traders can extract even more profitability and keep the capital needed to achieve such profitability at a minimum. By condensing risk this way, there is less capital on the line that is exposed to losses.
Margin is the amount of collateral available to be used within a margin account to open positions. Keeping additional margin available is imperative for when positions go against you. Otherwise, there is the risk of a margin call or liquidation if there isn’t enough available margin to cover positions.
It is for this reason that margin trading can get a bad reputation. But this is the trader’s fault for taking on too much risk and not keeping enough available margin on hand. Proper margin maintenance is critical to using margin trading as a strategy safely.
Margin trading platforms allow their users to trade using leverage, which lets them open positions much more significant than what the capital would otherwise allow. For example, buying Bitcoin at $25,000 during the recent collapse and selling it at $100,000 would result in $75,000 in profit. The same $25,000 using 200x leverage provided by PrimeXBT would be closer to $15 million in profit.
Long And Short Positions Allow Profit In Any Direction
Margin trading platforms differ from spot trading platforms because they allow long and short positions versus just buying and selling assets. With a spot trading platform, you can only be a buyer or sell your coins and be neutral. The only way to profit is when the market is moving up using a spot platform. When assets are in a downtrend, there is safety in cash but no profits.
A margin trading platform’s long and short positions let traders profit from both directions of the market. When prices are falling, short traders don’t just protect capital but can make money while others are suffering. When prices rebound, going long can profit from uptrends. Hedge positions let traders open both a long and short at once until a more straightforward direction is chosen.
During the recent crypto bloodbath, HODLers were decimated and are stuck holding at a loss. PrimeXBT traders remained in profit, per the top-ranked traders of the Covesting copy trading module. Covesting is a peer-to-peer copy trading community where top strategy managers are ranked transparently by ROI in a global leaderboard system. While most of the market suffered losses, ROI reached as high as 5,000%+ on Covesting and PrimeXBT, and there is proof behind it. Using the tool, followers were also able to stay profitable by copying the trades of traders who know how to weather the storm.
Stop-loss protection keeps losses from ever getting severe while using leverage, which does increase risk as much as it does profitability. To ensure the most profitability as possible, take profit orders close out a position when a target is reached. With all this at your disposal, protecting capital and becoming more profitable are just a few clicks away.
A Massive List Of 100+ Trading Instruments
Another significant benefit of the award-winning margin trading platform is the massive list of today’s most popular trading instruments. More than 100 trading instruments are available across forex, commodities, crypto, and stock indices, from a single margin trading account.
The list of cryptocurrencies includes Bitcoin, Ethereum, Litecoin, and other mainstays from the market, as well as an abundance of altcoins from various crypto categories like DeFi, GameFi, Metaverse, and more. Global stock indices represent all major markets, including the US, Japan, UK, Germany, Spain, and so many more.
All major forex currencies are also offered, with a wide range of minor and exotics to choose from. The most important geopolitical commodities like natural gas, Brent and crude oil, gold, and silver, are also in tow. More assets are regularly being added, so check the company’s blog for any announcements as they happen.
With such a diverse array of assets, long and short positions on each, margin traders can build a risk-averse and highly profitable trading portfolio that cannot be replicated on a spot exchange. At PrimeXBT, traditional assets meet the future of finance.
The Pros And Cons Of Margin Trading With PrimeXBT
With all that in mind, let’s break down the pros and cons:
|Increased profit potential||Increased potential for risk|
|Smaller capital requirements||Must keep maintenance margin|
|Larger list of trading instruments||Cannot own any assets|
|Make money during downtrends||Requires some skill|
|Copy trading available|
Conclusion: Pros Outweigh The Cons, Try PrimeXBT Today
Relying on PrimeXBT during downtrends instead of simply HODLing on during the rollercoaster ride until it is safe again is proven profitable. Traders having more than 5,000% ROI to show for the recent crypto market carnage is nothing short of amazing. For these margin traders, there are far more pros than cons to show for their time, effort, and capital.
PrimeXBT is an award-winning margin trading platform with more than 100 trading instruments all under one roof. The long and short positions keep traders profitable no matter the trend. The next time you consider making a deposit, remember the pros and cons of margin trading and put your money behind the powerful trading tools offered at PrimeXBT.