What is Crypto Margin Trading? (USA Guide)

Margin trading in crypto is a way of trading with only a fraction of your own capital, plus using borrowed funds, or leverage, to increase buying power and boost profits. This somewhat risky way of trading the digital currency market is very popular among active investors with a larger risk appetite.

The story of using borrowed capital and injecting it in search of bigger rewards is an old story on the street. As long as there has been a way to invest money in financial markets, or other investment vehicles, there has been a way to leverage your capital to amplify the result of your winnings.

Today we are going to break down the margin trading component in cryptocurrency investment and take a look at how it is done, why it is important, what the fees are, and some benefits and risks that will come along the way.

Most retail investors will find it very intriguing that they can make an initial deposit of only $500 as margin collateral and leverage this money up to 100 times and enter the market with a position size worth $50.000.

If you want to know how this works and why it is such an effective (but risky) investment method, stick around and read until the end where I highlight some of the biggest benefits that I have found in trading digital currencies on margin.

Table of content

• What is crypto margin trading?
• Example of margin trading
• How it works
• Why margin is important in crypto trading
• How to margin trade coins
• Fees and commissions
• Where can you trade?
• Benefits of margin trading bitcoin
• Typical risks
• Final views

What is margin trading in cryptocurrency?

Margin trading crypto is done by leveraging borrowed capital from your cryptocurrency exchange or broker platform to trade larger position sizes than you are normally capable of opening.

An example of margin trading in cryptocurrency would be where a trader makes an initial deposit (his margin capital) and uses leverage to trade Bitcoin. The leverage ratio used also determines the margin required by the trader which is usually only a small fraction of the whole position size.

One thing to keep in mind when using borrowed funds derived from a third-party liquidity provider is that you cannot lose this money. The only money you risk per trade is your own margin capital which is going to be sitting in your margin account.

Now, there are two things that you need to be able to separate in order to have an easier time understanding this whole concept. Margin and leverage are two sides of the same coin but they are fundamentally different and they both serve a different purpose in margin trading cryptocurrencies.

Key takeaway:

• Margin = Your own capital that you deposit
• Leverage = The borrowed funds you receive from your exchange

Once you learn to separate these two factors you will instantly learn how to calculate your margin and how to control your risk, but more on that further down in this guide. They will go hand-in-hand throughout every trade that you enter on a crypto margin trading exchange.

Margin trading crypto example

To explain further how this works I will give you a quick example of two traders where one is going to enter the derivatives market and the other will trade the open spot market.

In this example, Joe will trade a derivatives contract of Bitcoin with 1:50 leverage and Lisa is going to spot-trade Bitcoin using only her own funds. Below are the outlined factors:

• Both traders will open the position at the same time and they will close the trade at the same time.
• They will both make an initial deposit of $2000.
• They will make a 15% profit on the trade.
• Both traders will use all their deposited capital.

Let’s see how the margin affects Joe’s position and let’s see how much money they both make. Below is the calculation.

Since Joe is using 50x leverage he will be able to enter the market with 50 times more buying power.

50 x $2000 = $100.000

Joe has $100.000 of working capital that he is using to open his position. Lisa on the other hand only has her $2000 and that is all she is going to use.

A 15% gain for Lisa is a profit of $300.

A 15% gain for Joe is a profit of a whopping $15.000.

That is the power of trading on margin when you are correct in your predictions and you make a profit. Keep in mind that this is a best-case scenario where we have used a high leverage ratio as an example.

It is not impossible to make these kinds of gains in the crypto market since the volatility of the coins definitely approves of a 15% gain in any single day.

The difficult part is to enter the trade with precision since your liquidation price is going to be very close to where you entered.

How margin trading in crypto works

Standard spot trading where you trade a spot market without leverage and margin trading is pretty similar with a few exceptions. Margin trading offers more buying power through leveraged contracts such as futures, swaps, CFDs, and other cryptocurrency derivatives products.

The big difference is that in a spot market you only have access to your deposited amount whereas on crypto margin trading exchanges you have access to a nearly unlimited amount of capital.

Let’s say that you open an account on a normal spot exchange and you deposit $500, you will only be able to open positions worth that amount, $500. However, if you deposit $500 on a margin platform you can leverage that amount up to 200x which would give you access to a position worth $100.000.

This works since your broker lends you money on top of your initial deposit, or margin capital, of $500.

This loan works automatically and you only need to worry about how much of a position you want to open, the rest is handled by the liquidity provider of the exchange you are using.

Once you choose your leverage ratio and open your position the capital you loan is actively working in the market.

Once you close out the position your margin capital is returned to your account (plus or minus the profit or loss incurred on the trade) and the capital lent is returned to the crypto platform.

Modern margin platforms have created a seamless experience for active day traders and leverage is offered directly after an account is created and a first deposit is made.

Why margin is important in digital currency trading

Retail investors use margin accounts to leverage their cryptocurrency portfolios and this is for good reasons if you know how to do it because it can yield great returns both in the short and long term.

As most beginner traders and investors lack proper funding, margin can serve as that extra juice that you otherwise can afford.

It is not required to pour thousands of dollars or euros into the crypto markets, however, if you want to make significant gains as an aspiring trader, you need to enter the market with some level of buying power.

To demonstrate how important margin is in crypto trading I will make a comparison between two trades taken with an 18% gain in Cardano during a breakout on a positive trading day.

We will call them trade A and trade B where trade A uses 30x leverage on a margin platform and trade B trades the regular spot market.

Both trades will be done with an account of $1500.

Below is a table that shows the difference in profits made between A and B.

Account	trade A	trade B
$1500	+$8100	+$270

Trade A clearly makes a bigger profit due to the increase in position size.

These are not made-up numbers.

They apply directly to the result of margin traded accounts and as long as you use the proper risk management and employ great strategies you can enjoy the same numbers.

Keep in mind that this is a high-risk strategy and should not be used by traders with a lack of understanding of margin traded accounts or how to properly manage market risk.

How to margin trade coins

Due to modern exchange platforms, the process of entering a margin traded contract is not difficult at all. Most traders will find it just as easy as entering a spot market.

A standard procedure looks like this:

1. Choose an exchange platform, such as BitYard.
2. Sign up with your email.
3. Go through the KYC process.
4. Fund your account.
5. Select the contract that carries leverage.
6. Pick a digital currency pair.
7. Follow your strategy and enter the market.

It’s not more complicated than that.

You now have access to high multiples of your deposited capital.

Popular strategies

This style of investing calls for some high-quality strategies that are essential to assure maximized profits and the protection of your downside.

Your risk should be the main priority and a proper risk-management system is a key to long-term success.

Read some of the most popular margin crypto trading strategies that you can implement today to improve your results:

• Breakout trades – This is by far the most profitable strategy due to the momentum it provides and the high success rate. Breakouts happen on the upside and the downside when a market is ready to move out from a range that has been dominant for the past days or weeks. When a market breaks out from a range it usually accompanies high volume and increased volatility. The key is to enter early and heavily. Good breakouts don’t fall back into the range and it’s your job to read the price action going into the breakout.
  
• Add to your winners – A very common strategy to push winners is to add to your winners. If you manage to enter early on a good trade, add to your position, and raise the stop-loss to break-even or profitable level below the price. The best trades don’t return to your entry price and therefore it can be very profitable to double or even triple your position when you hit a home run trade. This will push your monthly profits and will assure that you stay in the game for the long run.
  
• Short-sell support lines – If you are going to short the market, the best time to do it is when the market breaks below a previous support level. A support level acts as a protection and safety zone for bullish traders and when the market surprises them by dipping below their support level it can cause a cascading effect of sell orders. When the market falls below this level, most of the stop-loss orders that the buyers added before will now become market sell orders that get triggered almost simultaneously. This creates high volatility and increased volume. If you can enter the market just as it breaks you will be able to enter with a tight stop-loss and with high volume.
  
• Only risk 1% – The 1% rule says that you should only risk 1% of your trading capital. For example, if you have deposited $1000 in your account, your maximum risk per trade should not be more than $10. You should control your risk level with your position size and your stop-loss. The further away your stop-loss is from your entry price the smaller your position size will be. When you enter with a very tight stop-loss you can increase the position size while keeping the same 1% risk ratio.

Understanding margin calls and liquidation

A margin call happens before liquidation and it is a warning sign that your account is reaching the low end of your margin requirement.

Since your margin capital always acts as risk capital, you need to have sufficient funds in your account to support your losses.

Losses are of course normal in the world of trading but a loss too large in margin trading can cause your account to get liquidated.

Liquidation means a total loss of all your funds due to your losses being too large. This can sometimes happen when you overleverage your position and take on too much risk.

If you notice that you get margin called very often it is a good practice to:

1. Lower your leverage to match your investment style.
2. Change market to reduce volatility.
3. Decrease your position size to only lose a small amount of capital when liquidated.
4. Always use isolated margin to prevent your whole account from getting liquidated.
5. Make sure to use a stop-loss that is far away from your liquidation price.

Some traders can handle high-leverage trading in crypto while others find it very difficult and risky.

Now, margin calls are not the end of the world but they are a warning sign that you have taken on too much leverage and your account is at high risk. The good part is that you can prevent this from happening by following the advice above.

To get a deeper understanding of how to use your margin see our guide on isolated margin vs cross margin.

Go short or go long

Choosing a leveraged trading crypto product gives you the option to go both long and short in all the markets that are traded on the platform.

To go long means that you buy a digital currency and profit when prices rise. To go short means that you borrow coins from the broker, sell them to the marketplace, and then buy them back at a lower price for a profit.

Most traders are familiar with speculating on the long side of the market while many have never heard about the fact that you can make money in crypto in a declining market.

Short-selling a cryptocurrency can only be done on brokers and exchanges that offer leveraged contracts.

To bet on a falling market is seemingly more difficult and should be practiced with a smaller stake in the beginning.

While most investors buy cryptocurrencies and hold on to them for long-term gains, many day traders use margin platforms to benefit from short-term negative price movements.

This style of investing can be extra profitable during a crypto bear market.

What are the fees and commissions like

This is something that you should take notice of. Your fees are directly connected to the size of your position.

This means that if you increase your position size 15 times, the commissions will increase 15 times as well.

Let me demonstrate this with two examples, one without leverage, and one with.

Example 1:

• Steve trades BTC/USD with a position size of $2000 and 0.15% commission.
• His total commission is = $2000 x 0.0015% = $3

Example 2:

• Steve trades BTC/USD $2000 on margin with 15x leverage.
• His total commission is = $2000 x 15 x 0.0015% = $45

Here you can clearly see how the commission increased with the use of borrowed money. As the positions get bigger, the fees increase.

This can cause a lot of problems for new speculators that overleverage and bleed out due to high commissions.

Always read the fine print regarding the fees before you start or choose a crypto exchange with the lowest fees.

Where can you trade with margin?

The best option when it comes to choosing a platform is to pick a regulated operator that accepts your local currency.

There are of course unregulated off-shore exchanges that offer the same type of products but the security is not trustworthy.

There are only two types of operators that you should turn to that I have listed below:

1. Crypto margin trading exchanges – These are operators that offer perpetual swaps contracts and inverse contracts under a regulated business name. The security is very high and the fees are generally pushed as low as possible.
2. Crypto derivatives trading platforms – Derivatives trading offers different kinds of products such as futures and options which are a little bit different in the way the contract works. They are a little bit more complicated in nature and have an expiration date on the contracts.

Benefits of margin trading

• Increased profits – The biggest and most enticing fact about this style of investing is that you can make a lot more money in any single trade when you use borrowed funding. If you previously made around $50 – $250 consistently per profitable trade you can make 10 times, 30 times, or even 50 times that money in any position. This is not something made up. It is very common to see traders pull off days where they make several thousand in profits.
• Enables traders with less capital – This is the second most important factor why investors choose to increase their buying power. It is well-known that most retail investors are lacking proper funding and with an account of less than $10.000 it’s going to be significantly more difficult to stay alive while speculating in the markets.
• Promotes flexible strategies – It is a great option to leverage up your account to use several different strategies. Just increasing your purchasing power 10 times will give you the option to run different strategies in up to five markets or more.

There are several other reasons for choosing this type of investing but these are the most sought-after.

Should you find yourself not making enough gains, having a small account, or just not being able to trade all the strategies that you want? Then margin trading in crypto might be just what you are looking for.

Know all the risks

• Bigger losses – The big elephant in the room is of course the amount of cash you stand to lose if you misjudge the market or make the wrong call. A leveraged position loses much more money than a regular position and this is something that you have to get used to if you want to stay in this type of game. Control your losses with position size, leverage, and stop-loss.
• Difficult to understand – Many beginners find it difficult to understand all the moving parts such as margin capital, liquidation price, isolated or crossed margin, etc. These terms take some time to learn and they are going to be essential to your success so take your take to understand all the factors before you start with live money.
• Liquidation – A liquidation means a total loss of all money in your account. This happens when your losses exceed our risk capital. If you get liquidated you need to take a step back and analyze what went wrong. Most of the time a trader will overleverage and overtrade due to greed.

These are the most prominent risk factors that you will face and I highly recommend that you master the platform before you start adding size to your trades.

What is margin trading in crypto in USA?

The easiest way to explain margin trading in crypto is that you are borrowing money from your exchange to be able to trade bigger positions. For example, if your account size is $1000 and you trade with a x10 margin, your biggest position size would now be $1000 x 10 = $10,000.

If you trade with x100 margin, your biggest position size would be $1000 x 100 = $100,000. In short, margin or leverage is a multiplier that allows you to trade with more money than you have deposited in your account.

How it works is pretty simple. Your cryptocurrency exchange lends you money to trade with and in return, they get a bigger profit from your trading fees. When you make a profit you get to keep all the gains and when you lose you have to pay up for your loss. Profits and losses will also be multiplied by the margin you choose.

For example, if you buy bitcoin with a x10 margin and it makes a 5% gain during the night, your position would make 5% x 10 = 50%. If you buy bitcoin with x100 leverage and the same thing happens, bitcoin makes a 5% gain during the night, your profit would be 5% x 100 = 500%. As you can see, margin or leverage makes things bigger depending on the level of leverage you choose.

Be careful though, leverage trading works the same way when you lose money. A position with x10 leverage that would normally lose 2% overnight will now lose 20%.

This is the basic concept of margin trading for cryptocurrencies and it is all you need to know to figure things out. To make things even more clear, I have included a table for you to make your calculations.

What other traders from the USA ask

How to calculate the biggest position size and profits with margin

This table indicates the maximum position size you can take with different account sizes from $500, $1000, $5000, and $10,000. We will take a look at the difference between leverage from x5 to x200. This table shows how much capital you will be able to control in active positions in the crypto market.

Maximum position size

Account size	x5 margin	x10	x20	x50	x100	x200
$500	$2500	$5000	$10,000	$25,000	$50,000	$100,000
$1000	$5000	$10,000	$20,000	$50,000	$100,000	$200,000
$5000	$25,000	$50,000	$100,000	$250,000	$500,000	$1,000,000
$10,000	$50,000	$100,000	$200,000	$500,000	$1,000,000	$2,000,000

5% profit with different margin

In this table, we calculate the potential profits of a 5% gain with the same position sizes and the same levels of leverage. Take extra notice of how the profits scale up when using higher leverage. I do want to point out that the higher leverage you use the riskier you trade will be. The profits you see in this table are what you keep when you close out the trade.

5% profit on	0 margin	x5	x10	x20	x50	x100	x200
$500	+$25	+$125	+$250	+$500	+$1250	+$2500	+$5000
$1000	+$50	+$250	+$500	+$1000	+$2500	+$5000	+$10,000
$5000	+$250	+$1250	+$2500	+$5000	+$12,500	+$25,00	+$50,000
$10,000	+$500	+$2500	+$5000	+$10,000	+$25,000	+$50,000	+$100,000

25% profit with different margin

Now we take a look at the potential profit of a position that makes a 25% gain with the same position sizes and the same levels of leverage. You will see how the bigger gains get amplified by higher levels of leverage. You keep all the profits you see in the table below.

25% profit on	0 margin	x5	x10	x20	x50	x100	x200
$500	+$125	+$625	+$1250	+$2500	+$6250	+$12,500	+$250,000
$1000	+$250	+$1250	+$2500	+$5000	+$12,500	+$25,000	+$50,000
$5000	+$1250	+$6250	+$12,500	+$25,000	+$62,500	+$125,000	+$250,000
$10,000	+$2500	+$12,500	+$25,000	+$50,000	+$125,000	+$250,000	+$500,000

When we calculate the potential profits earned from trading cryptocurrencies with leverage it’s obvious that the numbers get more interesting the more leverage we use. This is also a key factor to why it has become so popular.

It is possible to earn a lot of money by trading digital assets with leverage and if you do it the right way you can earn more than you expect overnight. Remember to always use a stop loss or trailing stop loss when engaging in leverage trading. Read our guide on cryptocurrency exchanges with stop loss for more information about platforms that offer great order types.

Is it possible to margin trade crypto in the US?

The most common question we see when searching the web is “can you leverage trade crypto in the US?“. The answer to this is a straight yes, however, it is not as easy as it is for other countries. The reason why we see so few exchanges with leverage in the US is the fact that the regulators have been very strict and don’t allow everyone to offer leveraged derivative products.

Some exchanges with a FinCEN Money Service Business license can offer margin derivatives products such as BitMart, but the number of exchanges is not at a staggering amount.

It takes hard scrutiny from the exchange to be able to acquire an MSB license from the regulators and for many platform owners, it is not worth the hassle. In many cases, they look to open an off-shore exchange where the regulators are more laid back and have fewer hurdles to pass.

So, to sum up, you can trade digital assets in the United States but you need to know which exchange offers the right product under the right regulation. Please adhere to the list of the best crypto margin exchanges in the USA further down in this guide where we highlight our top picks.

How to trade crypto on margin and leverage in the USA

This is going to be a quick guide on how to start trading digital assets with leverage for US traders.

1. Sign up with any of the platforms in our list below.
2. Follow the KYC process and send in your documents.
3. After getting verified, located the Derivatives or Futures products in the main menu.
4. Choose the cryptocurrency you want to trade.
5. Select the leverage you want to trade.
6. Enter your position size.
7. Click Buy/Long or Sell/Short to open your position.

That’s it! You have now opened a leveraged position. Make sure that you use your stop loss to protect your downside when buying coins with leverage. The cryptocurrency market is very volatile and a stop loss is the best way of protecting your downside risk.

BitYard

BitYard is a Singapore-based crypto derivatives platform that allows US traders on the platform. What makes this exchange great for investors in the USA is the fact that they are regulated in the United States as a Money Service Business (MSB) by the Financial Crimes Enforcement Network (FinCEN).

This cements the trustworthiness of the platform and combining that with the high leverage, low fees, and several hundreds of altcoins makes it a great trading platform for margin traders. This is also an exchange that allows shorting bitcoin and crypto which makes it possible for traders and investors to bet on a declining market.

Margin on BitYard

• x125

Margin trading fees on BitYard

• 0.10%

BitMart

BitMart is a US-based cryptocurrency exchange and is regulated by FinCEN as a Money Service Business. BitMart offers short-selling and trading in over 370 digital assets with some of the lowest fees on the market.

The exchange was launched in 2017 just before the bitcoin bubble went parabolic and it has grown in population since then. Some special features on BitMart that stand out to us are the high security, OTC market, staking, advanced trading interface, and the option to buy cryptocurrencies with fiat money.

Through the margin platform, BitMart offers all traders to trade altcoins with leverage with high ratios of up to 125x multiplier.

Margin on BitMart

• x125

Margin trading fees on BitMart

• 0.25%

CEX.IO

CEX.IO is a UK-based exchange for cryptocurrency trading that has acquired a Money Service Business regulation with FinCEN in the United States. The exchange is also regulated with FINTRAC in Canada and GFSC in Gibraltar.

This increases the trustworthiness of the company and it is one of our top recommendations for traders looking to trade cryptocurrencies with leverage in the USA. Some of the most important features on the platform are a fiat account, the option to buy crypto with fiat money, beginner-friendly, staking, high limits, and several different products.

Margin on CEX.IO

• x100

Margin trading fees on CEX.IO

• 0.25%

Gate.io

Gate.io is our last recommendation and it is a cryptocurrency exchange based in the Cayman Islands that allows traders from the United States to trade on the platform except for traders coming from New York and Washington.

Gate.io is a non-regulated platform but it is a trustworthy exchange based on many factors such as reputation and great security protocols. Traders can enjoy promotions, crypto lending, dollar-cost averaging for crypto, demo trading, cold storage wallets, complex order types, Tradinview charts, and several different tradable instruments for digital assets.

Margin on Gate.io

• x10

Margin trading fees on Gate.io

• 0.20%

Different levels of margin and leverage explained

When reading about different levels of margin on cryptocurrency exchanges you often see something like this 1:100, 1:250, or even 5:250. The first example 1:100 is the same thing as saying that they offer leverage from x1 to x100. When you see 5:250, it means that they offer margin from x5 to x250 and the number is the multiplier that you get on your capital.

For example, if you open a position with x5 you will be able to open a position 5 times bigger than you normally would, with the help of leverage. If you open a position with x250 you are using 250 times more capital than you have in your account. I want to try to explain the different levels so that you get a better understanding of the concept and also choose how much you want to use when trading and I will do this by using the stop loss method.

When trading with borrowed capital you get more buying power or shorting power, than you otherwise would have. In other words, your position size gets heavier than your actual account size and when the market moves, your position moves exponentially.

Below is a table showing you how much room you have to your liquidation level, or, the leverage stop out level where your position reaches a certain amount of loss that your account can’t support.

We are going to use an account size of $2000 for simplicity reasons and we will use different levels of leverage to see how much the market can go against you before you lose all your capital.

Liquidation points for different levels of leverage

Position size = $2000	0 margin	x2	x5	x10	x20	x50	x100	x200
Loss tolerance	-100%	-50%	-20%	-1%	-0.50%	-0.20%	-0.10%	-0.05%
Explanation	With 0 leverage you can never get liquidated	At x2 you will get liquidated if the market goes 50% against you.	At x5 you will get liquidated if the market goes 20% against you.	At x10 you will get liquidated if the market goes 1% against you.	At x20 you will get liquidated if the market goes 0.50% against you.	At x50 you will get liquidated if the market goes 0.20% against you.	At x100 you will get liquidated if the market goes 0.10% against you.	At x200 you will get liquidated if the market goes 0.05% against you.

Important!
I highly recommend new traders to not use more than x2 or x5 leverage when starting out due to high risks of liquidation.

The more leverage you use the tighter your liquidation point will get. At x2 you are doubling your position size and the new liquidation point is at 50%, that is common sense it is easy to understand.

The more leverage you use the smaller your margin to your liquidation gets and at x10 or more you have 1% or less to work with. Only traders with enough experience in short-term trading should trade at higher levels.

How to protect yourself against liquidation

The absolute best way to protect yourself against having your position liquidated is to use a stop loss. Many crypto trading platforms offer this order type and it gives you the flexibility to add a protective stop at a certain level below your entry price where you are no longer in danger of getting liquidated.

Fees for trading crypto on margin in the US explained

Low trading fees are a must for any trader who is going to trade digital assets with leverage, why is that? Well, let me explain how the fees work for margin traders and why you want to find a low-fee crypto platform.

The basic concept is that you always pay the trading fee on your full position size, for example, if you open a position of $10,000 and the trading fee is 0.20% you will pay $20. Now, if you use x20 margin and open a position that is 20 times bigger, $200,000, you will still pay 0.20% on the full position size which would be $400.

To demonstrate this in an easy-to-read format I’ve created a table below. Take note of how expensive it gets as you increase the leverage and how important it is to use a platform with very low fees. I have created three different examples of trading fees (0.10%, 0.25%, 0.50%) with different levels of leverage for traders with an account size of $500, $1000, $5000, and $10,000.

0.10% margin trading fee

0.10% fee of	0 leverage	x5	x10	x20	x50	x100	x200
$500	-$0.5	-$2.5	-$5	-$10	-$25	-$50	-$100
$1000	-$1	-$5	-$10	-$20	-$50	-$100	-$200
$5000	-$5	-$25	-$50	-$100	-$250	-$500	-$1000
$10,000	-$10	-$50	-$100	-$200	-$500	-$1000	-$2000

0.25% margin trading fee

0.25% fee of	0 leverage	x5	x10	x20	x50	x100	x200
$500	-$1.25	-$6.25	-$12.5	-$25	-$62.5	-$125	-$250
$1000	-$2.50	-$12.5	-$25	-$50	-$125	-$250	-$500
$5000	-$12.5	-$62.5	-$125	-$250	-$625	-$1250	-$2500
$10,000	-$25	-$125	-$250	-$500	-$1250	-$2500	-$5000

0.50% margin trading fee

0.50% fee of	0 leverage	x5	x10	x20	x50	x100	x200
$500	-$2.5	-$12.5	-$25	-$50	-$125	-$250	-$500
$1000	-$5	-$25	-$50	-$100	-$250	-$500	-$1000
$5000	-$25	-$125	-$250	-$500	-$1250	-$2500	-$5000
$10,000	-$50	-$250	-$500	-$1000	-$2500	-$5000	-$10.000

Important!
It is not recommended to trade digital assets with a leverage higher than x5 if you don’t have the right experience or education in leveraged products. Higher margin can lead to very high trading fees.

These tables do a great job of demonstrating the importance of using an exchange with as low fees as possible. Leveraged trading is truly a double-edged sword where you stand to make half a fortune in a short time when timing the market right but it also eats your account slowly if you are using the wrong broker.

When trading with a margin of x200 or more you need to find an exchange with a lower fee than 0.50% otherwise you will eat up your entire capital on the first trade.

Crypto margin trading laws and regulations in the USA

The biggest question we see among US traders is “is crypto trading illegal in the USA?” and the answer to that is not at all clear yet. Why is there no direct answer to this simple question for US traders?

Let me explain.

If the exchange is not properly regulated it is illegal to promote derivatives products, and this is why it is so difficult to find an honest platform that offers margin trading for cryptocurrencies.

To be able to offer leveraged derivatives products in the United States you first need to be regulated as a Money Service Business (MSB) by the Financial Crimes Enforcement Network (FinCEN).

When filing for an MSB approval certain things must be in check to receive the license, for example, the platform needs to have a know your customer (KYC) system that tags all customers and their identities.

The exchange has to comply with anti-money laundering (AML) and combat the financing of terrorism (CFT) acts. There are several regulatory bodies in the United States, for example, the Securities and Exchange Commission (SEC) which regards cryptocurrencies such as bitcoin as a security, and the Commodities and Futures Trading Commission (CFTC) sees digital assets as commodities.

This creates some barriers that are yet to be taken down before we can see a clear regulatory landscape in the country. Until the regulatory bodies have agreed on how to regulate digital assets, US traders will stay in the gray zone with only a few platforms to turn to when it comes to trading cryptocurrencies on margin.

Risks with margin trading explained

All trading is risky but margin trading is especially risky since you control more money than you own and your liquidation point is closer to your open price than normal. Below are some key risks to consider before starting. These may be different for different traders.

• Significant risk of losing money – This is the obvious one and it goes without saying that you can lose all your money.
• Losing more money than you own – Always check that your broker or exchange has a negative balance protection before you start trading, meaning, the exchange will not let your account size go below zero and into minus territory where you now owe the trading platform money.
• Uninformed decisions – Bad trades happen all the time but it is more common in the world of leverage trading because many traders don’t understand how it truly works. Before starting out, we recommend that you spend some time researching if this style of investing really is for you.
• Using a fraudulent platform – Be aware of bad actors when choosing a platform, especially those without government regulation. Unregulated platforms can do anything they want with your capital and account such as close it down, stop withdrawals, and freeze funds.
• Short-selling – When trading on margin you open up the option for short-selling. This is a bet in the negative direction and your position will lose if the market trends are up. Since the market can move up indefinitely, your short position is at high risk of getting liquidated if the market keeps going up. Make sure you understand how short-selling works before you start.
• Liquidation – A liquidation happens when your position has lost too much and your account capital can’t cover the open loss. When your position gets liquidated you lose all the money connected to that trade and in some cases also your full account.
• Unexpected fees – Leveraged platforms can often att extra fees such as a Roll Over fee, also called an overnight fee. This fee is what you pay for using the extra funds lent to you by the platform. Other fees might also occur so make sure you read the fine print before you start.

This style of investing comes with certain risks that you can avoid simply by choosing a trusted and safe crypto exchange, educating yourself before starting, and don’t trade with more money than you can afford to lose. Find some of the most reputable exchanges in the list above.

Conclusion: Should you trade digital assets on margin?

Margin trading in crypto is a powerful tool — but only when used with a clear understanding of the risks and mechanics involved. This guide has walked you through everything you need to know as a beginner: from what margin trading is and how it works, to how to calculate profits and losses, choose the right leverage, understand liquidation and margin calls, and pick a trusted exchange that supports margin trading in the USA.

We’ve also explored popular trading strategies, how to go long and short, what fee structures to expect, and the importance of risk control. Whether you’re trading Bitcoin, altcoins, or a mix of both, using leverage can help you scale your profits — but it can just as easily amplify your losses.

If you’re an experienced trader looking to unlock more buying power, margin trading can be a great next step. But if you’re new, start small. Practice with lower leverage and always use a stop loss to protect your capital. Consider paper trading or using a demo account if available.

In short, margin trading isn’t for everyone. But for disciplined traders who take the time to learn, use proper tools (like stop loss and position size calculators), and stick to a strategy, it can be a way to grow faster in the crypto market.

Good luck — and trade smart.