How to Leverage Trade Crypto in 2023 (A Beginner's Guide)Nov 03, 2022
Wanna Learn How to Leverage Trade Crypto?
So, you wanna learn how to leverage trade crypto successfully? Well then, keep reading...The cryptocurrency market was the talk of the town in 2021. With its bull run, many small-time investors made a fortune on their initial investment. After a wild roller coaster ride, most digital tokens are now trading at a much lower prices than before.
The bear market has left crypto investors jittery about whether or not to invest in this asset class again. Nevertheless, there are still several good reasons why you should consider an investment in crypto again as soon as possible. Whether you’re just dipping your toes into the water with crypto for the first time or have been holding on to your digital tokens from last year’s bear market, now is the perfect time to learn how to leverage trade crypto in 2023 and beyond.
Why You Should Leverage Trade Crypto in 2023
There are many reasons why crypto has proven to be ideal for leverage trading, but here are the main ones:
- High Volatility: Cryptocurrencies have shown to be more volatile than almost all other asset classes.
- Strong Potential for Growth: A number of analysts predict that cryptocurrencies will continue growing strongly in the future. Forbes predicts that the total crypto market cap will reach as high as $10 trillion by the year 2025.
- Easy to Access: The barrier to entry for trading in cryptocurrencies is lower than other asset classes, like stocks. Anyone with a computer and an internet connection can access the cryptocurrency market.
- Direct Ownership: Trading in cryptocurrencies allows you to own a piece of a company without the complications involved in buying shares of stock.
- Tax Breaks: In many countries, trading in cryptocurrencies comes with a reduction in taxes.
Best Crypto Leverage Trading Exchanges
Here are a few top cryptocurrency leverage trading exchanges where you can leverage trade crypto:
- BitMEX is one of the largest and most trusted cryptocurrency exchanges in the world. It was launched in 2014 and is based in Hong Kong. BitMEX provides various products and services, including leveraged trading.
- Bybit is a cryptocurrency derivatives exchange that offers leverage trading of digital assets such as Bitcoin, Ethereum, Litecoin, and EOS.
- Phemex is a cryptocurrency exchange that offers spot, futures, and derivatives trading with up to 100x leverage.
- Deribit is a Netherlands-based exchange founded in 2015. It is a regulated and fully transparent platform.
- eToro is a multi-asset trading and investment platform. It provides access to a wide range of assets and is available in most countries around the world, except the USA.
- Binance is a cryptocurrency exchange that provides a platform for trading various cryptocurrencies. Binance was founded in 2017 and is headquartered in Malta.
- DYDX is a decentralized margin trading platform built on Ethereum that allows users to trade digital assets using leverage. Leverage allows users to trade with more money than they have in their account, and can be used to amplify gains (or losses).
Crypto Leverage Trading Best Practices
- Always start with a small investment when learning how to leverage trade crypto. Remember, even if you make large profits, you still may have to pay taxes on your gains, so small amounts can still make you a small fortune in the end.
- Study the market. Read up on the different cryptocurrencies. Understand what makes them valuable and how the market works. This will allow you to make more informed decisions and avoid getting caught up in the hype.
- Stick to higher time frames. Many new traders make the mistake of using low-level time frames like a 5 min or 15 min chart to make trading decisions. Trading is a game of statistics, so if you want better results use time frames with more data points, like a 4h, 12h, 1D, and Weekly.
- Start out small and experiment. When you start out, use a small amount of money and experiment with various trading strategies to find what works best for you.
- Use leverage responsibly. Leverage can make you a lot of money, but it can also cause you to lose a lot very quickly. Always keep this in mind when making decisions.
- Diversify your portfolio. Crypto is a highly volatile market, so it is a good idea to diversify your portfolio by leveraging different types of tokens.
- Keep an eye on margin calls. If you use leverage to increase your profits, you could also lose more than you bargained for very quickly due to margin calls. Make sure to keep an eye on your account so that you don’t get surprised with a margin call.
Best Crypto Leverage Trading Strategies
- Trading on the Breakout - This strategy involves buying a token when it breaks through a resistance level and selling it when it breaks through a support level. This is a great strategy for an uptrend.
- Trading on the Breakdown - This strategy involves shorting a token when it breaks through a support level and covering your short position when it breaks through a resistance level. This is a good strategy for a downtrend.
- Trading on the News - This strategy involves buying or shorting a token when there is news about the token that could significantly affect its price.
- Trading on Sentiment - This strategy involves buying or shorting a token when there is a significant change in sentiment.
- Trading on Break Even - This strategy involves buying or shorting a token at market price and closing your position when the price returns to the price at which you entered the trade.This can be a profitable strategy when the exchange is paying market making rewards/fees.
- Trading on Bollinger Bands - This strategy involves buying or shorting a token when the price moves outside the upper or lower Bollinger Band.
Best Crypto to Leverage Trade
If you are learning how to leverage trade crypto for the first time, then we suggest you start with Bitcoin. Bitcoin is the most well-known and popular cryptocurrency out there. It is also the most liquid token, so you can easily enter and exit a position. It is also highly volatile, so it is a good choice for leverage trading.
Secondly, you have Ethereum. Ethereum is a smart contract platform that has a strong development team and a large community. It is also a good choice for leverage trading.
Thirdly, you have Chainlink. Chainlink is a decentralized oracle network that allows smart contracts to access off-chain data sources. This enables the use of smart contracts on a blockchain to interact with real-world data.
There are many different cryptocurrencies that are good for leverage trading. The three above are just a few examples. Ultimately, the best crypto to leverage trade is the one you think you understand the most. The one you have an edge with!
There are many reasons why you should leverage trade crypto in 2023. First among them is the fact the industry is very young and still in an early stage of development, so there is a lot of room for growth and potential gain. Also, the bear market in crypto, according to many financial analysts, will end in 2023, so there's a once-in-a-lifetime opportunity for those who get in early.
Trading in cryptocurrencies also allows you to get a piece of the pie without having to be an accredited investor, or already a millionaire. Crypto is an asset that can be easily bought and sold, so you can make substantial profits through leverage trading (if you know what you're doing!)