One of the top cryptocurrency exchanges out there, Kraken, has announced quite an exciting news. Its early New Year present involves launching margin trading facilities for two new coins: Bitcoin Cash and Ripple. The two coins are extremely important in the market at present, with Ripple in fact being the second largest one in terms of market cap.
With this addition, the number of coins for which Kraken supports Margin Trading goes up to eight. Earlier, it was supported on coins like Bitcoin, Ethereum, Augur, Ethereum Classic, Tether and Monero. Now all these six assets and two new ones can be traded on a margin via Kraken.
Their announcement, which came via their Twitter account, identified by the handle @krakenfx. In the announcement, they also linked their blog post detailing the same.
Tempering the exciting announcement with a note of caution, a Kraken statement said:
“Margin trading allows you to leverage your account for greater profits, while also assuming greater risk. […] While margin trading can lead to greater profits, it can also lead to greater losses.” In addition, the exchange noted that margin positions can be forcibly closed to protect the borrowed funds, which means that a trader “may be forced to take a large loss on a trade rather than having the option to try and wait for a more favorable price.”
As per statistics provided to us by Coinmarketcap, Kraken currently ranks at the thirty first position in the list of crypto exchanges as per trading volume. Margin Trading, while being a rather risky endeavour, also tends to be a rather rewarding investment experience,if done well.
Margin Trading basically refers to buying cryptocurrencies worth a higher value than you are currently capable of spending. You basically take a loan from the broker to trade on a margin. Once the investment is made on a margin, the recovery of profit should be made within a decent duration to make sure there is no loss for the exchange.
For a clearer understanding, make sure to read our article on “6 Things To Know About Margin Trading“.