Best Crypto Margin Trading Platforms
Margin trading implies leveraging borrowed funds in transactions, with a significantly smaller amount of one's own funds used as collateral (margin). What are the most secure leverage trading platforms?
If you've ever wielded a lengthy wrench to loosen a stubborn bolt, then you understand the concept of leverage well. The greater the distance from the pivot point, the more substantial the force applied to the object. This concept is analogous in trading: higher leverage allows you to execute larger transactions with the same capital amount.
We have discussed the intricacies of margin trading in detail in this article.
Let's explore the premier platforms where one can put theory into practice.
Kraken
For U.S. citizens, engaging in margin trading is optimal on the Kraken exchange. However, there's a crucial stipulation: Kraken, being a compliant exchange, restricts margin trading for traders who fail to meet the standards set by the Commodity Exchange Act. This precaution was enacted in June 2021 by the exchange's management to evade potential legal disputes with regulators.
Put simply, if you don't hold $10 million in investment funds, your leverage will be capped at 5:1, or access to this service might be entirely denied.
However, there’s a silver lining: traders from other nations aren’t subjected to these restrictions.
Even so, American traders are hopeful—perhaps with justification—that with a change in SEC leadership, the stringent policies imposed on crypto exchanges will ease, and margin trading will once again be accessible to retail investors.
Trading conditions on Kraken include:
- The minimum margin requirement is 20% of the transaction value.
- Traders must maintain a minimum of 40% equity in their margin accounts to sustain open positions.
- Leverage can vary, depending on account level: it’s limited for basic levels where only 2FA is required for verification and maximum for the PRO level, attained by clients who have undergone an exhaustive KYC survey.
- The maximum loan amount is $750,000, dispersed among all margin trades.
- Margin allowance limits vary for each currency.
- Support is available for 220 digital and 6 fiat currencies.
- Users can purchase cryptocurrency directly from a linked bank account.
The fee structure is dynamic and dependent on the amount borrowed and the cryptocurrencies engaged in a transaction. For instance, rollover fees range from 0.01% (e.g., for BTC) to 0.02% (USDT).
Kraken offers a user-friendly experience, making it easy for beginners to navigate through its interface. For those not utilizing Kraken Pro, the fees are considerably lower—up to 0.01%. (In contrast, the taker fee on Kraken Pro is 0.26%, and the maker fee is 0.16%).
The paramount advantage of margin trading on Kraken is its security.
A downside, however, is the intricate system of fees, which can prove challenging for newcomers to decipher.
BingX
BingX, a cryptocurrency exchange based in Singapore, has been a player in the market since 2018. It appeals to customers with its extensive array of tradable assets, boasting 527 listings at the time of this article, and offers substantial leverage, with a maximum of 125:1.
Moreover, initiating trade on this platform does not necessitate going through KYC procedures. Without an authenticated account, the daily limit on withdrawals is restricted to $50,000, and leverage cannot surpass 5:1.
BingX caters to users from Canada, the European Union, Hong Kong, and Taiwan. However, the facility to conduct smaller, non-verified transactions is also exploited by U.S. citizens.
The trading conditions on BingX are as follows:
- A variable trading fee, ranging between 0.1–0.17%, contingent on the pair;
- A withdrawal fee of 0.00035 BTC;
- No deposit fee;
- Withdrawal limits are asset-dependent.
Beyond its extensive asset listings, the exchange has another significant benefit: consistently replenished margin pools. The platform effectively encourages users to allocate their funds for margin transaction lending.
However, there’s one critical disadvantage: BingX cannot provide the security level assured by Kraken. The ability to trade without verification opens doors for minor scammers, who target naive newcomers on this platform.
WhiteBIT
WhiteBIT, a leading European exchange with roots in Ukraine, also provides its users with margin trading tools. On this platform, users can execute trades with borrowed funds, utilizing leverage from 2x to 20x.
The platform refrains from offering its services to traders from the USA, Canada, and countries under sanctions, thus it is primarily appealing to crypto investors in the EU and Asia. With support for a wide array of fiat and 270 digital currencies, the multitude of trading pairs available can meet the needs of the most seasoned traders.
The trading conditions on WhiteBIT include:
- A fixed 0.1% commission for both opening and closing positions;
- A 0.1% rollover fee;
- A unified 0.0585% commission for utilizing borrowed funds (applied only when a trade is partially closed at the least);
- Owners of the exchange's token (WBT) are subjected to reduced commissions.
Some advantages of margin trading on WhiteBIT are:
1. A Risk Score – a visual representation of risk, showing the current trading status of an account on a scale from 0 to 100%. An orange color on the scale denotes a Margin Call, while red signifies impending position liquidation.
2. The presence of a consolidated cross-margin account, allowing users to offset losses on one asset with profits from another.
However, this also implies that if a significant position with high leverage faces liquidation, all funds can be lost. Extreme vigilance and continuous monitoring of the risk scale are essential with cross-margin.
3. High security with proof of reserves.
Regardless of which platform is chosen, it’s important to be mindful that margin trading is inherently risky. If utilizing leverage above 5, one must be aware of the risk of losing the entire collateral in case of adverse price movements against the position.
