Hello, this is Tapu.
Today, I will explain margin trading, which is a method of trading Bitcoin using leverage. I will also explain how to open an account.
We will cover the following topics:
What futures trading and margin trading are
Why you should use futures and margin trading
The advantages and disadvantages
How to open an account
How to deposit and withdraw funds
Useful tips for futures and margin trading
What are Bitcoin Futures and Margin Trading? (Leveraged Trading)
Just like foreign futures trading that was once popular, this method allows you to trade Bitcoin using leverage and a margin deposit.
For example, buying 1 Bitcoin requires 60 million KRW.
With margin trading, you can trade 1 Bitcoin using 10x leverage, even if you only have 6 million KRW.
Isn't it too dangerous? Why trade futures and margins?
It is a very dangerous trading method.
If you have watched foreign futures broadcasts or tried trading them, you probably know this.
Since you use leverage, holding for a long time becomes very difficult.
Therefore, stop-loss is essential. You must approach this method from a trading perspective.
Recently, Bitcoin has entered a correction phase and volatility has decreased.
So, many people find trading Bitcoin itself boring.
Aggressive investors cannot stand boring movements.
They look for altcoins or scam coins, and often suffer big losses.
As a result, they are afraid to touch altcoins, but Bitcoin's movement is too boring.
That is why those people look for margin trading with leverage.
Bitcoin has low volatility.
However, if you trade with 10x leverage, even a 1% movement changes your account balance by 10%.
So, you can increase the volatility yourself.
As you know, leverage is a double-edged sword.
Conversely, if the price moves 1% in the opposite direction, your account can quickly lose 10%.
People say that in a rising market, money multiplies just by pressing the buy button.
In this situation, futures trading has a major advantage. If you use leverage to buy, you can maximize your profits.
For instance, in a bull market, you might earn 10 million KRW with standard Bitcoin trading.
However, if you use leverage, it is possible to earn 30 million or 40 million KRW.
Should you always use 10x leverage?
There are various types of leverage.
As you can see, it ranges from 1x to 100x.
Recently, the maximum leverage has decreased to 25x. However, 25x is still a high ratio.
When volatility is high, you can reduce the leverage. Conversely, when volatility is low, you can increase the leverage.
If you trade with 25x leverage like Park Ho-doo, you might lose everything. Therefore, I recommend reducing it to less than 5x.
Of course, there is no single right answer. It depends on the person and the trading method.
However, high leverage carries high risk. Therefore, trading with less than 5x leverage is the most efficient method.
What are the advantages and disadvantages of futures and margin trading?
Advantages
As mentioned above, the advantage of margin trading is that you can increase low volatility using leverage.
Also, when a trend appears, such as an uptrend or downtrend, you can use leverage to greatly increase your account balance.
In particular, during a bear market, there is no way to respond if you trade on exchanges like Bithumb or Upbit.
However, futures and margin trading have an advantage. You can make a profit by short selling in a bear market, just like buying an inverse product.
Disadvantages
You can suffer losses in both directions.
You might lose money on long positions during a downtrend. You might also lose money on short positions during an uptrend.
Your account balance can be ruined quickly.
If you cannot overcome the temptation of leverage, your account will be wiped out in an instant.
Therefore, stop-loss is essential, not holding for a long time.
How to open a Bybit Bitcoin Futures and Margin Trading Account
Do you now have a rough idea of margin trading?
It is easy to think of it as a Bitcoin version of foreign futures trading.
Opening a Bybit account seemed complicated, so I was confused at first.
However, when I actually tried it, it was simpler than I thought.
For an easy explanation, I will use the PC version.
The mobile version is not much different.
First, access the Bybit website using the link below.
Link below for 20% off fees.
Enter the email you want to use in the blank field. Then, enter your password.
Here, the password must be between 8 and 30 characters long.
It must include lowercase letters, uppercase letters, and numbers.
Completing KYC Identity Verification
Regardless of which exchange you use, the identity verification (security level) process is mandatory.
You can only deposit and withdraw funds after completing this process.
Hover your mouse over the icon shaped like a person in the top right corner of the main screen.
Here, the items you need to complete verification for are Identity verification, Email Authentication, SMS Authentication, and Google Two Factor.
The "Identity verification" item is the process of confirming your identity.
If you verify your passport, driver's license, or resident registration card, Lv.1 will be completed.
If you complete verification up to this point, there are no issues with actual trading, depositing, and withdrawing funds.
Find "Your country" here and select "ID Card".
Then, take a photo of your resident registration card and upload it.
Then, to check for forgery, you must go through a face scanning process.
When your face enters the camera frame, the screen changes to "Processing...".
It says that the face scan is complete like this.
Next, click the "Next" button.
Then, it indicates that the review is in progress.
The time required ranges from a few minutes to a few days, depending on the situation.
In my case, it was completed within 2 to 3 hours.
Security Verification (Two-Factor Authentication)
Whether you signed up with your mobile phone or email, you must also set up Google Authenticator verification for safety.
Futures Trading and TradFi
There are two types of accounts used for trading on Bybit:
- Unified Trading Account
- TradFi Account
The Unified Trading Account is generally used for buying cryptocurrencies or trading crypto futures.
The TradFi Account is used for trading US stocks, commodity futures, and other foreign futures.
By clicking the 'Transfer' button, you can transfer USDT to your Unified Trading Account.
Enter the desired amount in the 'Amount' field, and then click 'Confirm'.
For TradFi, click the 'TradFi' tab on the left, and then click 'Transfer In' located on the right.
Here, enter the desired amount and simply click 'Confirm'.
Trading Fees
Unlike stocks, in margin trading, the fees differ between Limit Orders and Market Orders.
If you use a Limit Order, you will receive a 0.025% fee rebate.
(This is a reward for providing liquidity to the order book).
If you use a Market Order, you must pay a 0.075% fee.
(This is a charge for consuming liquidity from the order book).
Therefore, using Limit Orders is actually more beneficial as you can earn fees. However, if you need to execute a trade immediately, you must use a Market Order to open or close a position.
Since both have their pros and cons, please choose the one that best fits your situation.
We have now covered everything from opening a Bybit account to making your first trade.
Although the guide seemed long, the actual process takes less than 30 minutes.
For leveraged trading like futures and options, it is best to start with a small amount and proceed step-by-step. I also practice trading with small amounts, with the mindset that I could lose it all. If your trades go well, you can gradually increase your capital; if you lose everything, simply start again with a small amount.
Since it is high-risk trading, the potential rewards are also enormous. With high-risk trading strategies, you can achieve significant results even with a small portion of your portfolio, so please use them wisely.
If you need education on futures trading, you can apply through the link below. I will cover everything from how to avoid bankruptcy in futures trading to the specific strategies I use.
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