Best 26 crypto exchanges with margin trading in 2022

Crypto Exchange with Margin Trading (and High Leverage Ratios)
Margin trading can boast your potential returns, by increasing your investment size with leverage

Margin trading allows investors with lower liquidity to trade cryptocurrencies without holding the capital required to open bigger size positions. Several crypto exchanges offer margin trading with different leverage ratios and depending on the traded asset, ratios can range from a low 2X to a high 100X (even 500X in some cases).

With leveraged trading, investors can go long and short with bigger lots on several cryptocurrencies, without having to hold the capital required to open such positions.

What is cryptocurrency margin trading?

Cryptocurrency margin trading allows investors and speculators to trade with leverage by borrowing funds from the exchange or a broker. Margin trading is considered to be one of the most profitable trading strategies, but also the riskiest.

Getting access to margin trading it’s quite simple. Signup with a crypto exchange, or a broker, complete a margin trading risk questionnaire (if imposed by the company), and activate a margin trading account.

The margin trading account will allow investors to trade on selected cryptocurrencies with the borrowed funds, and with the maximum leverage offered by the company.

Again, cryptocurrency margin trading can be very profitable, but due to the typical volatility of crypto assets, also very dangerous. Here’s an example:

An investor decides to margin trade ETH/USDT with a 5X leverage ratio. Meanwhile, the ETH/USDT price surged by 10%. This means the investor’s position will yield 50% profit because of the 5X leverage. Without leverage, the same position would have been only a 10% profit.

Now, let’s imagine the opposite happened, ETH/USDT crashed. With a 5X leverage the same position would yield a 50% loss, and the higher the leverage ratio, the higher the risk.

With a 10X leverage ratio, the same position would have a margin call (position closed automatically by the company and complete loss of initial margin).

So, before jumping in with the big guns, make sure you understand the risks involved with cryptocurrency margin trading – in a nutshell, higher leverage, higher risk.

How does cryptocurrency margin trading work?

When an investor sets up a margin trading account, the next obvious thing is to deposit some funds to activate the account. Crypto exchanges, and brokers, normally, have multiple funding methods available and investors can deposit in fiat currencies and several cryptocurrencies, via a crypto wallet.

Now, with the margin account with some funds, the investor can borrow additional funds from the crypto exchange/broker, using the deposited funds as collateral. Some companies might restrict the leverage ratios (i.e., max 3X, or 5X) depending on the selected crypto asset.

Next up, the investor opens a margin trading position and goes long on the BTC/USDT price, for example. The investor’s borrowed funds will start accruing a financing interest rate, calculated over a specific period (every hour, every 4 hours, every day), and updated frequently.

The investor will need to repay the financing rate in the same coin as borrowed. In our example, the investor borrowed BTC, thus, the account needs to have enough BTC when making the financing rate repayment.

Please note that, normally, crypto exchanges do not accept other coins for the financing repayment, and also that it's common practice, when repaying the coins, that investors need to repay the interest first.

So, even when the cryptocurrency margin trading position is liquidated by the investor (or in case of a margin call), if no financing repayments were done, the interest will still be due, and the profits might dwindle substantially.

Isolated margin trading and cross margin trading

Normally, two types of crypto margin trading are offered to investors. Let’s quickly understand the concept of both and the main differences between isolated margin trading and cross margin trading.

What is cryptocurrency isolated margin trading?

Trading cryptocurrencies with isolated margin allows investors to limit the risks related to trading by restricting the amount of margin used on just one pair. With the isolated margin if the investor’s position reaches a liquidation price, then the loss will be only for the funds of that particular position. In summary, trading cryptos with isolated margin is to be used only in a single cryptocurrency pair/cross.

What is cryptocurrency cross-margin trading?

Trading cryptos with cross margin allows investors to share the entire asset balance across all the open positions in the margin trading account. Cross margin can prevent earlier liquidation, as the winning positions can balance the losing positions. Cryptocurrency cross-margin trading is mostly used by professional traders and investors for hedging existing positions.

Pros and cons of cryptocurrency margin trading

Cryptocurrency margin trading can be highly profitable as it provides access to more funds and enables investors to diversify their trading positions.

The main reason behind the high profitability of margin trading is the higher relative value of the trading positions. After all, margin trading helps traders to open multiple positions with little, initial, investment funds.

But, as with every trading strategy, cryptocurrency margin trading is not without cons. It is highly risky, the traded assets are extremely volatile, and losing positions on margin can lead to significant losses, including total loss of capital. And in extreme situations, a margined account can incur a negative account balance, meaning that traders can face losses greater than their initial investment.

If you’re willing to try cryptocurrency margin trading, check out our list of the 26 best crypto exchanges with margin trading in 2022, sorted by overall rating. Check out the self-reported daily volume of each exchange, the taker and maker fees, number of coins and pairs supported, maximum available leverage, and more.