Taming the beast: should you get into margin trading?

To some, margin trading is a staple of crypto life. To others, it’s more like gambling. For an unlucky few who go into margin trading ill-prepared, it can end in disaster. The potential rewards of margin trading are tempting for many traders, but it’s vital to remember that trading on margin and using leverage are part of a skill set.

For those who take the time to learn their EMAs from their RSIs, it can really pay off, but there are risks, which can spiral out of control if you don’t know what you’re doing.

With Liquid, we want our clients to be successful in everything they do. We’re not a casino and you’re not betting against the house. It’s important for us to guide our users in the direction they want to go. That’s why we are working on providing as much useful, informative content as possible that educates and empowers traders to make smart choices.

We are confident that our platform is going to make a significant impact to the world of margin trading, but the last thing we want is for newcomers to the space to end up liquidated and rekt.

Empowered not pressured

There’s a complete ecosystem of different kinds of users of all crypto platforms. Any exchange that has half a clue what it’s doing will have spent a considerable amount of time getting to know these different users. While this is a useful exercise, we understand deeply that a user who may be a hodler one day and a swing trader the next may have a desire to explore new aspects of crypto trading.

Our role as an exchange is to provide that trader with the best possible platform to explore these aspirations while making informed decisions.

Margin trading is not something to be taken lightly. We’ve all heard horror stories about traders betting big on going long or short only to end up with empty balances. Many of those people could have avoided losing their money by simply making smarter decisions, but it’s hardly surprising that traders make bad choices when they’re new to crypto because there are so few reliable, trustworthy sources of information. We want to buck that trend.

If we can contribute to the continued learning of people interested in crypto, then we can come away knowing that we’ve done a good job. If those people then choose to do margin trading and can do it well, that’s a good thing.

Taking a position

Margin trading is such a big part of crypto and we know that many people want to try it. The enhanced returns from margin trading are clearly attractive – the higher the leverage, the higher the potential profits. Traders trade because they want to make profit – and they should be able to do that on a safe, secure platform like Liquid, which is regulated by the Japan Financial Services Agency and audited by Deloitte.

One of our core values is transparency. If you’re a trader who comes to us, you know that if you open an account on our platform, you can use true fiat to buy and sell crypto and to fund your account for margin trading. Our margin trading instruments are based solely on actual digital assets, not derivative. We’re able to offer this instrument because of our steadfast approach to compliance and doing things by the book.

We give margin traders what they want: leverage and liquidity. We’re able to provide up to 25x leverage and the liquidity of our orderbooks means you’re getting tight spreads on key pairs. This is thanks to our World Book tech, which matches orders from different order books under the hood. It won’t be long before we’re ready to deploy this tech in other exchanges and create a global pool of liquidity.

We believe we can provide the best possible platform for trading margin. But there’s another side to this. We are also able to offer lending, thereby creating a complete marketplace ecosystem for the new crypto economy and providing a financial service for the global market.

In much the same way as peer-to-peer lending platforms function, we have a marketplace in which borrowers (margin traders) can take out loans from lenders. Trading on leverage necessitates the need to borrow funds, be them crypto or fiat. 

Without lenders, there won’t be margin traders, and without margin traders, there won’t be lenders. It’s up to you whether you want to margin trade or lend, or even if you want to do both, but we’re providing the platform where you can use these features, learn and earn.

There are some exchanges offering margin trading that should be worried, not just because we’re making a big, calculated play to take up market share, but because we’re doing it by offering the features traders want in a compliant, regulated, safe and secure environment.

Be Liquid, my friends.