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The stress on the fact that the exchange does not suffer any losses is quite inviting a statement to make whitelabel leverage crypto exchange a lucrative business.<br><br>It is quite easy to kickstart your business provided you meet the regulatory requirements, and establish your compliance. All you need to do is either create your crypto exchange platform with leverage from scratch or purchase white label cryptocurrency exchange software with leverage.<br>
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Cryptocurrency Trading: A Deep Understanding of Leverage/Margin Exchange Platform
Introduction • What is leverage trading? • What is buying on margin? • Working of leverageTrading • Conclusion
What is leverage trading? • In simple terms, leverage trading is a trait that is executed by using borrowed shares from your broker to increase the size of your portion in a play so that you can make more money on the otherside. • There are different types of leveraged trades like options, futures contracts, and buying on margin. Among all of this, buying on margin is considered to be the most profitable, and proportionally, the riskiest.
What is buying on margin? • While buying on margin might seem so sophisticated, we have always had an alternate terminology that we have taken for granted – loans! Yes, what we essentially do while taking a loan is thatyou take a considerable chunk of cash fromaninstitutionthatprofitsfromlendingmoneytoyou. • Ifyouweretobuyacarfor$50,000,youendupputtingdownpaymentof$5000and borrow$45,000 over atimeperiodof,let'ssayfiveyears. • Every month, you pay an installment for the borrowed money, which includes boththe principal and theinterest. • Margintradingalsohascertainfactorslikethemultiplierandtheamountthatyouwill need to essentially have in your tradingaccount. • Althoughtheprocessmightbesimilar,itcannotbeconsideredcompletelycongruent becausebuyingacaroraphysicalassetisnotthesameasborrowingfortrading.
How does leverage trading work? • Leverage trading is all about borrowing shares or cash to buy shares, or in this context, crypto assets for trading from the exchangeitself. • Leverage is always expressed as a ratio – some crypto exchanges offer leverage of 2:1, and some even offer leverages as high as100:1.
Let us take the example of a 100:1 leverage. The 100:1 leverage simply means that you can borrow 100 times the amount you have set aside as the margin. Therefore, if you have $1000, you can participate in trades that require you to have$100,000. For the sake of convenience, let us take the price of the Bitcoin to be $1000. If you have just $1000, you can buy just one bitcoin. If the price of the bitcoin rises by let's say, $10, you can sell them and get a profit of $10 for that $1000 youhave. However, if you were to borrow $99,000 from the exchange as leverage, you can trade for $100,000 instead of just confining yourself to the $1000. This means that you will not make just a $10 profit but a $1000profit. Once you have made your profit, you will have to return the $99,000 that you borrowed to the exchange itself. In addition, there is also an interest that is levied on the borrowedamount.
Conclusion • The stress on the fact that the exchange does not suffer any losses is quite inviting a statement to make whitelabelleverage crypto exchange a lucrativebusiness. • It is quite easy to kickstartyour business provided you meet the regulatory requirements, and establish your compliance. All you need to do is either create your crypto exchange platform with leverage from scratch or purchase white label cryptocurrencyexchange software withleverage. • There are a lot of companies that provide these services such as this website, and all you need to do is get in touch with them and let them know about yourrequirements.
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