3 Things You Need to Know Before Margin Trading on KuCoin

 3 Things You Need to Know Before Margin Trading on KuCoin

KuCoin is one of the newest cryptocurrency exchanges to hit the market, but it has grown by leaps and bounds in just its first year of business. This exchange focuses on trading digital assets and pairs with BTC, ETH, BCH, LTC, and NEO. If you want to buy or sell coins like TRON, IOTA, and Verge (XVG), KuCoin should be your first choice over Binance because it allows margin trading with up to 3x leverage.

1) What is margin trading?

Margin trading is the act of opening a leveraged position in any coin supported on a margin platform. In essence, it means borrowing funds from your exchange to purchase more coins than you could otherwise afford. This gives you the power to take advantage of larger gains in less time, but increases your risk as well since both movements have a magnified impact on the value of your holdings. However, with proper risk management and sensible investments, this practice can prove very profitable for both beginner and seasoned traders alike. kucoin margin trading. Margin trading platforms provide a loan for investors to buy securities or cryptocurrencies using an agreement to pay back the loan plus interest at an agreed upon date. Unlike other loans, investors are not required to put up their own property or assets as collateral. Traders buy securities by borrowing money from their broker and make repayments by liquidating part of their holding at market prices. The borrowed capital provides leverage so that even small movements in market prices translate into amplified changes in equity (profit or loss). Margin trading is typically seen as a form of investing where people borrow money from someone else to purchase shares or bitcoin. Investors will then earn profits on those borrowed funds when they sell their shares or bitcoin at a higher price. But there's one major risk involved: margin traders need to be aware that they're only allowed to borrow a certain percentage of the value of the securities they're buying, which leaves them exposed if the price suddenly drops below what they paid for it. 

One potential issue with margin trading arises when prices go down instead of up--especially if you've already purchased all your available positions--because now you'll owe more than what you originally borrowed because those positions will have lost some or all their value.

2) Why do we need it?

Kucoin margin trading, like any other form of trading, is not without its risks. However, by understanding the process and taking some simple precautions when using kucoin margin trading, you can minimize the risk of an unfortunate event and make sure that your investment goes towards the growth of your portfolio. 

Margin trading is a form of trading where you borrow money from a broker in order to trade securities or commodities with more buying power than what you have in your account. The borrowed money (known as margin) is secured by collateral. In this case, it would be Bitcoin or Ethereum that you put up as collateral for the loan. The process of borrowing funds to buy assets continues until you no longer have enough assets to repay the loan; if this occurs, your lender will liquidate your position and claim their share of the loss before returning what's left to you (minus fees). By keeping track of how much Bitcoin or Ethereum are at stake in a given position and adjusting accordingly, one can minimize their risk when using kucoin margin trading. Some people also use kucoin margin trading as a way to invest while they are unemployed or saving up for a larger investment, such as purchasing a house. Once they have enough capital, they may cash out and close their position with little exposure to market fluctuations. 

This post has been about three things you need to know before investing in any type of cryptocurrency. If these steps seem overwhelming but you still want to get started investing then follow our blog posts about cryptocurrencies and cryptocurrency wallets on our blog page!

3) How does it work?

Kucoin is a fast-growing exchange that also offers leveraged trading in major cryptocurrencies with the added benefit of access to relatively low priced coins that are not found on most other exchanges. With kucoin margin trading, you will be borrowing money from the exchange and paying an interest rate for it. All of this means that leverage is expensive, but it can amplify your gains significantly. This can work well when you have a good feeling about a coin going up in price but if things don't go according to plan, then you could end up owing more than you are actually earning! Why should I use it?: Leveraging can be a powerful tool for traders who want to take high risks with their investments but at the same time, there are some good reasons why you may want to avoid margin trading all together. The biggest reason is because any profits made on margin must be paid back before withdrawal or before converting back into USDT. There are times where using kucoin's margin trading system might just result in less risk and better returns so always know what you're getting yourself into before diving in head first. One way to get around the large capital requirements for leveraged trading on KuCoin is through 'crypto lending'. Rather than taking out a loan from KuCoin, users buy loans from third party lenders outside of the platform who provide fiat as collateral. These loans are usually issued at much lower rates and with much higher limits compared to crypto lending via credit cards which typically come with annual percentage rates (APRs) between 14% - 30%. However, crypto lending still comes with its own risks as it is still possible to lose part or all of your investment since you never really hold onto actual cryptocurrency until repayment occurs.