Crypto traders are always looking for a new way to get a leg up on the competition. This time, the advantage comes via a unique margin trading strategy. Using this strategy, traders are able to buy BTC at a discounted rate. The concept itself is nothing new as it’s been used in traditional markets for decades but now, we’re seeing it applied in a whole new light.
The foundation for this new strategy starts at loans. Loans are not just a temporary exchange of collateral for value. They have more innovative uses that crypto traders are taking full advantage of. In traditional markets, margin trading techniques use loans to increase trading power.
Say you have $100 to invest in a currency pair like USD/EUR. With margin trading, you can set a multiplication ratio (e.g. 1:40). What this means is that for every dollar you invest, the lender will give you $40 to trade. Hence, a $100 investment yields you $4,000 to trade on the market. Depending on your broker, traders can choose different margins and ratios.
To use this same strategy on the crypto market, crypto traders are flocking to cryptocurrency lending platforms. Some, like FinTech platform YouHodler, offer easy to use, automated margin trading tools like Multi HODL™ that let crypto traders open potential large trades using just a small, initial investment. Just like the brokers we saw in the traditional market, traders can set their desired risk/profit levels.
For this example, let’s say 1 BTC = $10,000
Open account on a platform like YouHodler.
Deposit $1500 worth of USDT into your USDT wallet
Open USDT/BTC Multi HODL™ with $1,500 USDT with a maximum multiplier set (x6.51)
The MultiHODL™ tools automatically lend the user 1 BTC (~ $1,500 x 6.51) to use as collateral for a series of incremental, automated loans.
During a bull market, the value of these trades can rise rapidly. Therefore, the user keeps all the extra profit while paying he broker a lower commission. In the case of Multi HODL™, the user always gets back their initial investment (in this example $1,500) and also keep whatever is leftover from the leveraged trading (in this example, $8,250).
In the event of the bear market, the crypto trader gets back their initial investment minus the loss from the event. Margin trading can be a risky strategy if the market is not in favorable conditions. Hence, all traders should be aware of potential losses before starting.
Thanks to innovative crypto lending platforms, traders now have more opportunities than ever to access large amounts of crypto starting off with a small amount of capital. Automated tools like the aforementioned Multi HODL™ making margin trading incredibly smooth and easy for all levels of traders looking to expand their portfolio immediately.