Best Tips on How to Make Your Margin Trading Profitable

Cryptocurrency trading can be extremely profitable for those who dare to venture into the medium. These digital assets enjoy very high volatility, which enables traders to speculate on their prices with very high potential returns. Compared to the live stock market, the fluctuations are even more noticeable: a change in several percent is quite significant for equities, whereas double-digit variations are extremely common with crypto.

Crypto profit opportunities can be further enhanced with margin trading. This financial instrument allows you to trade on borrowed funds and multiply your gains by a factor of up to 100x!

However, with this opportunity, there’s also an added risk. If the market doesn’t go your way, your position could be liquidated and you could lose all your trading capital in the process. To help you stay on the safe side during margin trading, we compiled a list of best practice tips. By abiding by these unspoken rules, you should be able to keep your margin trading venture profitable and avoid its pitfalls.

Don’t Double Down When Losing

Things do not always go our way when you trade. The cryptocurrency market is an unpredictable beast that can turn on you without any prior warning. Prices can spike or crash, and if you are in the unfortunate position of having bet against the market’s movement, you are probably going to lose some money.

In the case of margin trading, these losses can be further amplified by the fact that you are trading on borrowed money. This means that if the price action of the cryptocurrency you are trading goes the opposite way of your prediction, the exchange will require that you provide collateral for your position. In case your position goes bust, all of this collateral could be liquidated and claimed by the exchange.

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When experiencing a significant loss like this, we are often tempted to immediately place a new trade to recover our losses. In this case, emotions can quickly take over, making us make rash decisions. However, this also means that your next position would not follow any trading fundamentals, which will probably result in another loss.

So try to keep a cool head, recompose after your trade, and conduct sound technical analysis before reentering the market.

Minimize Your Trades

While it can be extremely tempting to go all in, or at least, enter the market with a significant portion of your capital, this also incurs a lot more risk.

Instead of being heavy-handed with your trades, try to create a trading plan and put your risk appetite on paper. This should allow you to make multiple small trades that will bring smaller profits. These smaller positions will accumulate over time, increasing your capital significantly. At the same time, you won’t be exposing yourself to unnecessary risk in a single position.

Avoid Market Dogmas

While the market follows some rules, they aren’t always set in stone. For example, many believe that if Bitcoin’s price is going up, the rest of the market will follow. While this is often the case, it’s never a certainty.

Before starting a new trade, try to assess your position without any prior assumptions. Make due diligence, research, and analysis to ensure the best ratio of success in your margin trading.

Stay in the Loop

You should always keep up with the latest trends in the blockchain space and beyond. Keep track of new technologies, updates, and implementations. The crypto market races at an incredible pace, and remaining informed about everything that is happening is crucial to making good trading decisions.

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Moreover, cryptocurrencies can correlate with geopolitical events all around the world. Consequently, don’t limit your knowledge to crypto alone, but try to follow topics that aren’t directly connected to cryptocurrencies but could sway the market in one direction or the other. For example, Elon Musk buying Twitter resulted in Dogecoin surging in price. Detecting such news pieces of information and applying them to your strategy will make you much more successful at trading.

Learn Trading Fundamentals

A successful trader is a consistent one. You can luck out once or twice and make serious profits on a trade, but learning trading fundamentals should be your bread-and-butter. Some tips include:

  • Learn technical analysis. This means that you should learn some pertinent technical indicators and employ them simultaneously to maximize your chances of getting a profit.
  • Research the fundamentals of a cryptocurrency before investing.
  • Place stop-losses on your trades to avoid getting liquidated and limit your losses.

After all, without fundamentals, trading is akin to gambling.

Be a Full-Time Trader

Becoming a full-time trader means taking your trading ventures very seriously. You need to create a trading plan, assess your risks, and learn about capital management when trading. When you trade full-time, you make sure that no important turn of events goes by you unnoticed. And information is power in a trader’s world.

When you trade more often, you will learn more and gain invaluable experience in this niche. This will allow you to make fewer mistakes and become much more consistent in raking in the profits.

Always Manage Your Risks

Managing your risks will go a long way. Cryptocurrencies are volatile and can result in severe losses if you aren’t careful. Assessing the amount of capital you are willing to risk and keeping track of it is essential to accumulating gains. A good risk ratio is to never enter a position with more than 2% potential losses.

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Never forget to place a stop-loss on your position, no matter how certain you are of it. This should limit your risks and allow you to manage them much more effectively in the long run.


Margin trading is popular for a reason — it can allow you to make incredible profits with a limited starting capital. It is a popular trading practice, especially in CFD trading. And while it’s a high-risk, high-reward trading method, following the tips in this article should keep you safe from losses and allow you to become a more consistent and  profitable trader.

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