The Pros And Cons Of Margin Trading On PrimeXBT

Crypto winter has returned in a significant way, and it has once again put a spotlight on margin trading platforms and more specifically, PrimeXBT. PrimeXBT was launched amidst the last bear market, and the profitable short positions helped solidify the platform as the place to be.

In this guide, we will explain what exactly margin trading is and all of the pros and cons of margin trading using the award-winning PrimeXBT platform.

What Is Margin Trading？

When many investors think of trading, they think of buying low and selling high. And while that concept is correct in theory, traders can only profit when the market is in an uptrend. The only other position is cash. Bear markets can go on for months to years, leaving limited means to make a return as a holder or spot trader in these conditions.

With PrimeXBT margin trading, users dont sell their crypto assets; they are instead used as collateral to trade Bitcoin, Ethereum, and many popular altcoins using leveraged long and short positions. Traditional assets like commodities, stock indices, and forex currencies are also available to trade with leverage.

By using digital assets as collateral, traders can amplify the power of each position using leverage. With much larger positions than what capital typically allows for, traders can make more money than otherwise possible, but it comes at an increased risk. It is for this reason we have prepared the below list of pros and cons.

The Pros And Cons Of Margin Trading

Margin trading is a powerful tool that must be harnessed with caution and care. It certainly helps if a trader has skills and understands the risk associated with margin trading and how to protect capital with risk management strategies. PrimeXBT offers a help center and the PrimeXBT Trading Academy educational website to assist traders with navigating the advanced trading toolset.

Pros

More Profits Per Trade

With up to 200x leverage on Bitcoin and other crypto assets, there is serious power at PrimeXBT and more than the industry standard. Buying Bitcoin at $20,000 and selling it at $60,000 would result in $40,000 in profit under normal circumstances. A $20,000 trade at PrimeXBT would earn nearly $8M from the same price movement.

Full Flexibility

Unlike spot trading, margin traders can take advantage of both directions of the market –– including uptrends, downtrends, and phases where the market meanders sideways. It also allows for more possible flexibility in trading strategies, where traders can scalp, day trade, swing trade, and more.

Cons

Increase Risk Of Capital Loss

The math works in reverse from the more profits per trade section above. This means that just as much as profits can be amplified using 200x leverage, losses are magnified by the same degree. Losses can stack up quickly unless stop loss levels are carefully placed, and proper risk management strategies are considered.

Once You Margin Trading, You Cant Go Back

After experiencing the power and flexibility of margin trading, it is impossible to go back to spot trading. Sure, you might hold longer-term spot positions, but when it comes to making trades, the risk versus reward always favors margin trading when in the right hands.

What Is PrimeXBT？

PrimeXBT is an award-winning margin trading platform that works to reduce the cons associated with margin trading and bring even more pros to the table. Advanced order types, stop-loss protection, and built-in technical analysis tools ensure that traders are armed with everything they need for proper risk management.

The platform offers exposure to more than 100 different trading instruments under one roof, each with varying degrees of leverage. Each of these global markets trends at different times and can be used to build a diverse portfolio of anti-correlated and uncorrelated assets. When crypto winter strikes, traders have the benefit of trading commodities or currencies instead.

PrimeXBT also offers the Covesting copy trading module, the PrimeXBT Trading Academy, weekly trading competitions, and a free smartphone app that lets users access the full suite of tools, buy crypto, and more. Try PrimeXBT margin trading today for best-in-class tools to keep profits flowing during any market conditions.