With the expansive prevalence of cryptocurrencies all around the globe in the business sphere, if you are looking for buying and selling cryptos yourself, you should venture into crypto trading. Or to go one step ahead, you should probably launch your own cryptocurrency exchange. There are already a multitude of exchanges making rounds in the market, but the demand is ever-growing. Every day there is a change in the number of exchanges, with newbies entering the market. Crypto exchange business is the most preferred business currently for spinning million-dollar profits from any corner of the world at ease.
Crypto exchanges are platforms that allow customers to exchange their cryptos for other cryptos, digital assets, or fiat money. There are a set of crypto exchange platforms among which, the most trending one recently is the crypto trading platform with leverage. It is currently the hot topic of the cryptosphere. Why? What is a crypto leverage exchange, and how does it work? Let’s discuss crypto leverage platforms altogether.
What is a crypto exchange with leverage?
Crypto exchange with leverage is a trading format that allows traders to expand their position in the market and the exposure for their crypto asset by borrowing leverage from traders on their exchange, or mostly from the exchange itself. Gone are the days where investors have to worry about their initial deposit to commence a business. With this exclusive exchange, traders can deposit a minimal margin and borrow a larger sum of money and conduct exchanges quickly and efficiently.
Leverage trading is also referred to as margin trading. Here, leverage is the sum the investor borrows to expand their position, and margin refers to the actual amount the investor deposits into the exchange. For a beginner, the concept of leverage/margin trading might be a bit of a head-scratcher. To make it easier for you to understand, let’s see how the exchange works below.
How does leverage/margin exchange work?
To initiate a trade in the leverage platform, the trader must first deposit an initial margin to open the account. The account should always consist of a certain amount to hold and maintain the position of the user. For the remaining, the trader borrows from the exchange and begins the trading process. To put it in simple words, investors deposit a small capital for a larger capital to amplify their position and profits.
The leverage ratio varies from exchange to exchange. The common ratio of leveraging an exchange offers upto 100X; that is, the multiplies of investors margin value upto 100 times. Each exchange will have its own set of rules according to which the leverage platform will function.
A leverage platform offers several other advantages for the investors. Let’s take a look at the most significant ones.
Primary benefits of leverage exchange platform
- Leverage limits
As discussed earlier, leverage platforms allow customers to borrow larger funds than the initial amount they deposit, which will help them with commencing transactions quickly and efficiently.
- Augmented returns
Investors can multiply their profits with just a minimal investment in this platform, and the exchange owners can also benefit big returns for the business from transaction fees.
- Auto-Deleveraging
There is an option to automatically liquidate the trader’s position once they hit the bankruptcy limit, which will eventually reduce risk factors.
- 24/7 trading with zero downtime
With leverage platforms, you can conduct trades 24/7, with zero downtime, i.e., there are no time constraints, and you can trade seamlessly, risk-free.
What is the difference between going short and going long?
In any crypto leverage/margin exchange platform, you will find options to “Go short” or “Go long.” What does it mean, and what is the difference between the two?
These factors are the preferences of the investor to trade, based on the changes happening in the price values. Going short means, the investors will open a short position, if they feel the particular crypto asset they trade will decrease in value. Whereas long is just the opposite. The investors will open a long position if they believe the crypto price will go high, which will also boost their profit returns.
However, it is mandatory for the exchange to hold collateral funds, which will be released once the trade is complete, and you will get returns of your deposited margin and the profit that you earned from the trade. Also, when the investor incurs a loss, and the amount goes down the minimum maintenance limit, the trade position will automatically be liquidated.
How cryptocurrency trading works in a leverage platform
Like we discussed earlier, crypto leverage exchange trading might be a bit confusing, to begin with. So, let’s jot down the process of how to open a trade and create a position in a leveraged exchange, step by step, below.
- Registration
The first step investors have to do is create an account and register. Once they enter their details, they will be navigated to the exchange website for confirmation. After confirming their email address, they are all set.
- Funding
Once the users have successfully registered, they have to fund their accounts. In order to create a position, the trader has to have a minimum capital in the account. There will be options to fund the account, such as via crypto deposit or through credit cards or other payment methods. But if the payment is made via credit card, there will be a higher fee charge, whereas if funded through bitcoin or other cryptos, there is no such problem. Once the funding is done, the transfer has to be moved from the crypto wallet to the active trading account.
- Trade Navigation
After the funds have been transferred, the trader has to navigate to the trade window, select pairing lists such as USD & BTC, then click the “trade” option.
- Position details
The next step is entering details for the position. The users have to select the order type, buy/sell, market limit, stop, and other details to create a position of their preference.
- Confirmation
The final step is where the user can confirm the order details and click send. Once the order has been sent, the user can review again and also see the current balance, used margin, available margin, etc.
This is how an exchange is being initiated in a leverage platform, and users create a position for themselves. Now, as mentioned before, this exchange is gaining huge traction among investors and is widely evolving in the market. So if you are aspiring to create your own leverage exchange platform, you need to know a few strategies that will help you gain a competitive advantage and make your business profitable. Let’s take a look at them.
Strategies that will help you with a lucrative business
- Gradually increasing trade position
If you are a beginner, it is safe to not get carried away. The best thing you can do is, take it slow, understand how it works, and start with a small position and minimum leverage.
- Understanding the order types (Take Profit, Stop Loss)
The leverage exchange platform comes with the options TP (Take Profit) and SL (Stop Loss) to minimize the risks for the traders. Gaining an understanding of how this work will help the trader set better targets and attain better positions.
- Demo Trading
Users can explore how the leverage platform works via demo trading, i.e., paper trading without risking any capital. This will help them learn better trading strategies and paves the way for new users to try their hands-on trading.
- Clear-cut goals
The users should be clear about what they want and not fall under a spell. They need to be clear where to stop, and use the risk-management option wisely, to minimize their risks.
- Dividing positions
The users will have an option to divide their positions into different fragments. By doing this, they can minimize risks and attain cumulative profits.
How to develop a leverage/margin exchange?
There are two ways to go about developing a leverage exchange platform. The first one is developing from scratch. With this exchange involving so many technical/ security factors, and already being a slightly intricate concept, this option would not be so viable. Also, it will take up a lot of time and cost the earth.
The second option is to acquire whitelabel solutions from a well-versed company. Whitelabel solutions are readily available solutions that come with every necessary integration required for the exchange for kick-starting and smooth functioning. Also, it comes with a name, brand, logo, UX/UI according to user preferences. Whitelabel solutions are easy, scalable, and customizable. They are also quick to deploy and available at cost-effective prices. Taking into account everything that is said above, whitelabel solutions are the way to go for your leverage exchange.
If you want to know more about whitelabel solutions before going for them, here is the set of features a whitelabel leverage exchange platform will be integrated with.
Key features of a whitelabel leverage exchange platform
- Multi-currency support
- Multi-language support
- GDPR-compliance
- Integrated Liquidity API
- Secure crypto wallet
- Admin Panel
- Social Trading/ Copy trading
- Multiple accounts management
- Smart order routing
- Perpetual contracts
- Auto-deleveraging
- Trade bonus
- Partial Close order
- Aggregated price feeds
- Risk-management
- Insurance fraud
- Market making tools
- FX/CFD leverage
- Affiliate marketing
- Trading Bots
- Mobile Applications
- Enhanced security
Cost of Building a leverage exchange
The cost of building a leverage exchange differs from customer to customer. It depends upon several factors, such as the features, technical, security integrations you require for your exchange, and your personal customization preferences. However, when compared to building from scratch, a whitelabel solution costs way less as it deprives you of the development costs, and you can add/ eliminate or customize however you want to.
Even though leverage exchanges are becoming widely popular, currently, there are only a few companies offering leverage/margin exchange platforms. They offer 100% tested and reliable whitelabel solutions for your leverage/margin exchange that are feature-rich, scalable, and customizable according to your preferences. Their services are also cost-effective.
There is no better time than now to get your leverage/ margin exchange development done. So, reach out to their experts, create your leverage/margin platform in no time, and make million-dollar profits.
Author bio:
Arya Florence is a blogger and advisor at Blockchain App Factory. She is an expert in inbound marketing and she has technical knowledge about the cryptocurrency exchange development.
