As 2018 comes to an end, the crypto exchange of Kraken has launched margin trading for Bitcoin Cash (BCH) and XRP on its platform. This expansion brings the total of digital assets with margin trading to eight. The other six digital assets include Bitcoin (XBT), Ethereum (ETH), Ethereum Classic (ETC), Augur (REP), Monero (XMR) and Tether (USDT).
XRP and BCH Leverages
The team at Kraken went on to specify the following leverage amounts for each new trading pairs.
BCH/XBT – 2x
BCH/USD – 2x, 3x
BCH/EUR – 2x, 3x
XRP/XBT – 2x, 3x
XRP/USD – 2x, 3x, 4x, 5x
XRP/EUR – 2x, 3x, 4x, 5x
With respect to borrow limits, Kraken provided the following tiers depending on the verification level of the user account.
Tier 1: 1 BCH
Tier 2: 5 BCH
Tier 3: 50 BCH
Tier 4: 500 BCH
Tier 1: 5,000 XRP
Tier 2: 25,000 XRP
Tier 3: 250,000 XRP
Tier 4: 2,500,000 XRP
The exchange will charge 0.02% as opening fee for margin trading and a similar percentage as rollover fee per 4 hours.
What Exactly is Margin Trading and Leverage?
Margin trading is the practice of using borrowed funds from an exchange or broker to trade a preferred asset in the markets which forms the collateral for the loan from the broker. Margin refers to the amount of funds the trader must put up from his or her own resources. Leverage is the ability to use the margin amount to control a bigger trade. The amount of leverage (as seen above) is determined by the tier level of account verification.
In the case of Kraken, the collateral held or margin currency, does not have to match the margin pair the trader plans to trade since the leverage is placed on the value of the entire trade. Traders can hold the following as collateral currencies on Kraken.
- Bitcoin (BTC)
- Ethereum (ETH)
- US Dollar (USD)
- Canadian Dollar (CAD)
- Japanese Yen (JPY)
Risks of Margin Trading
As much as there is potential to make massive profits, margin trading can also lead to greater losses. Also, if the losses are large enough, the trader’s margin positions can be forcibly closed (liquidated) by the exchange to protect the funds borrowed to open the trading position.
What are your thoughts on Kraken expanding its margin trading to include XRP and Bitcoin Cash (BCH)? Please let us know in the comment section below.
Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of Ethereum World News or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.
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