Do you want to start trading cryptocurrency? You have a plethora of options available to you. With more than 5,400 coins and tokens available, and hundreds of exchanges, you can start trading in the world’s most popular alternative financial market.
When signing up with an exchange, you have a few options for your account type. The two most popular types of trading accounts are margin and cash accounts.
With a cash account, you can trade the balance in your account, but after you finish using your buying power, you have to wait for 48-hours for your trades to clear before you can trade your account again. As a result, you end up missing out on opportunities to trade in between the clearance period.
With a margin account, the exchange fronts you the money for your account to trade while your previous trades are clearing. It’s a way of the exchange saying that they think you’re good for the money, and they let you carry on trading.
As a result, with margin trading, you never have to sit on your hands, waiting for your funds to clear. You can trade at any time of the day, and as often as you like. Another significant advantage of using a margin account is that many exchanges offer leverage on your trades.
What Is Leverage?
If you have a small account, then you probably want to grow it as fast as you can. It’s far more challenging to grow a $500 account than it is a $5,000 account. With more money in your account, you have a cushion if any of your trades go wrong. However, with $500 in your account, you have less room for error.
Using leverage in your trades on your margin account is one of the best ways to grow a small account fast.
If you get on a hot streak, it’s possible to return 100% or more to your account in a few days of trading.
Depending on the leverage on offer, you can turn a small account into some serious buying power. If you have $1,000 in your account, and you have 10X leverage, that means you have a buying power of $10,000 available to you. Therefore, you can go out and purchase $10,000 of crypto in your trades if you’re feeling confident in the move.