Loan funds help traders without large capital to significantly increase the turnover of trading operations on cryptocurrency exchanges. In order to avoid bankruptcy, it is necessary to calculate in advance a strategy for how to trade with leverage with minimal risk.


When using a coin loan brokerage service, it is important to soberly assess the likelihood of losing your own deposit, possible losses. Of course, the popularity of trading on credit is great, but experienced traders do not advise beginners to use it. Moreover, if a trader has only recently figured out how to create an order to buy/sell on the stock exchange, it is obvious that he should first study other strategies, methods of speculation.

The essence of leverage


What is leverage? So at exchange trading it is customary to designate a loan for opening a futures contract with a deferred execution date. For example, a trader has a deposit of 20 BTC. He can apply to a broker and get x3 leverage, which will allow him to open a position for 60 BTC.

Making a loan with collateral implies that the trader’s deposit becomes the security for the repayment of the loan. In this way, the broker protects its financial interests. In addition, it is important to consider that the return of the loan is carried out with interest. Typically, crypto exchanges have higher interest rates than commercial banks.

Features: how to trade with leverage on a crypto exchange?


The first difference: for example, on the Forex exchange, the majority does not have the opportunity to refuse leverage. On crypto platforms, a trader is free to choose whether he needs to apply for a loan; whether he needs margin trading or not.

The second difference: for example, in the stock market, the leverage starts from x20. At lower values, due to the low volatility of the currency, the profit from trading will be too small. Cryptocurrency, in turn, changes course rapidly, so significant income can be obtained quickly, even without the use of leverage.

The third important feature is the source of borrowed funds. A crypto exchange, by analogy with the stock market, can provide leverage, but this service is only available on sites with a large capitalization. Usually, the amount of leverage directly depends on the liquidity of a particular digital asset.

The fundamental difference lies in the fact that each user of the crypto exchange also has the right to act as an investor. That is, lend the funds of your deposit to other traders. In the end, the lender sets the interest rate for using the loan at its discretion.

The process of obtaining a loan is simple. First, the trader determines what maximum leverage suits him. Then he places an application with the amount and the desired conditions. It enters the Book of Collateral Trade Orders, after which the exchange automatically looks for the best offer.