Crypto Trading Instruments
In this crypto trading instruments article, we provide quick glance on instruments like futures, CFD, swaps, margin trading, and leverage trading. The main aim is to provide investigation about the availability of these functions in terms of crypto trading platforms that provide them. We go through platforms like BitMEX, Markets, Plus500, Binance, Bitfinex and conclude with general remarks about the industry and availability of instruments for cryptocurrency trading. Related article is Crypto Trading Terms.
In the world of trading, instruments come as one of the main revenue generators for investors. Without them, cryptocurrencies would not have reached their fame as they do now. Thus, platforms that offer these tools aim to bring in as many traders as possible. The more available instruments, the more attractive such platform is.
In this guide, we go over instruments themselves in terms of crypto trading platforms that offer them. We also provide details on what cryptos they apply and how complex the company made them.
A future contracting refers to a process, in which trader sets a predetermined price to be sold or bought sometime in the future. The contract is used when an investor is sure of his or her analysis of the future trends in the market. It is one of the more complex instruments that are rare to find in the crypto world. This is mainly due to high fluctuations in the value of coins.
BitMex is one of the leaders in the industry when it comes to trading instruments, and futures are no different. You have the ability to engage in contracts with the help of leveraging 100x for bitcoin. Other cryptos that are also available for futures are Cardano, Bitcoin Cash, Ethereum, Litecoin, and Ripple. Read more in our BitMex review.
CoinfloorEX started out as a subsidiary by Coinfloor, a UK exchange that offers crypto-related trade services. Since the platform just started out its trade size limitations are quite low. This allows new traders to have lower exposure to risk.
CFDs (contracts for difference) are popular within the trading market in cryptocurrency world. The ability to make a contract with the brokerage company and use their volumes is something starts to appreciate. It helps those that do not have large investments, to begin with, and allows them to make a profit from fluctuations. Platforms that allow clients to make CFDs are Markets.com and Plus500.
Markets.com – The platform offers CFDs for cryptos like bitcoin, Ethereum, Litecoin, and Ripple. The Markets.com, apart from coins, also has over 2.000 assets available for trade, while its services are available globally. You have the option to start out as a demo account, switching to real one once you get a hang of it. Read more in our Markets review.
Plus500 – is yet another trading platform that offers CFD contracts. You use the coins to make your strategies, without really owning any of it apart from profit or loss. The available cryptocurrencies at this market are bitcoin, Ethereum, Bitcoin Cash, Bitcoin Gold, Litecoin, and Ripple.
If we are talking about the most common trading instrument, it would fair to mention swaps as one of them. The function is used when a trader wishes to swap around his coin with altcoins owned by the platform. Many exchanges offer crypto-to-crypto service, often fixing popular cryptos like BTC, ETH, and LTC for the contract.
Binance – Binance started out form an ICO project, which resulted in a new coin (BNB) and platform as well. It is strictly a crypto-to-crypto trading marketplace with over 200 trading pairs and 100 cryptocurrencies available. The main coins for swap contracting are bitcoin, Ethereum, BNB, and USDT. You can read our review about it in our Binance review.
Poloniex – The US-based platform offers very similar services that Binance does. It is also a crypto-to-crypto trading platform, offering numerous coins for trading. Swaps are possible through trading pairs, which account for over 100 of them. Main coins for trading pairing are BTC, ETH, XMR, and USDT, as seen in the snapshot below. You can got to Poloniex review to get the latest information regarding the platform.
The availability of the instrument like margin trading really sets platform apart from its other rivals in the industry. The ability to borrow funds form the exchange and make a profit out of it does have its own advantages. Suffice to say, starters should experiment first with demos, as the instrument itself is complex. Platforms that allow you to engage in margin trading are numerous, with most popular being Bitfinex and Kraken.
Bitfinex – This platform is considered to be the largest one in the world in terms of USD to BTC daily trade. Bitfinex offers numerous functions at your disposal when engaging in margin trading. The marketplace offers an adequate number of cryptos (over 30) of them and trading pairs (over 70 of them). To know more, simply go to Bitfinex review to read our in-depth analysis of the trading platform.
Kraken – This European trading platform offers both simple exchange and margin trading marketplaces. You have several levels of trading forms, them being Simple, Intermediate, and Advanced. The limit functions allow you to set price restrictions, so your margin trading profit/loss would be completely under your control. To get more details regarding Kraken, make sure to read our Kraken review and analysis of the platform.
Apart from margin trading, leverage comes as the next most powerful tool in crypto trading. Leveraging allows you to borrow funds when creating an order. It powers up your order value several times with funds that would not have been in your possession otherwise. With the function available, you can make much bigger profits (and losses as well). The most famous platforms that offer the tool are Bitfinex and BitMex.
Bitfinex – Bitfinex, as mentioned before, is one of the largest fiat-to-crypto trade centers in the world. The leverage funding, unlike with some other platforms, has a source from the peer-to-peer market within Bitfinex. Bitfinex has ”Funding” market, in which traders provide their unused coins and earn interest as a result. Leverage draws from that pool and you have 3:1 ratio that you can use.
BitMex – BitMEx, much like Bitfinex, offers to leverage for its cryptos. All 6 of them are supported, though with different leverage rates. Bitcoin, for example, has 100x leverage rate, as seen in the picture below.
Cardano, Bitcoin Cash, and Ripple have 20x, Ethereum 50x and finally Litecoin 33x. Thus, you have options on all coins available, though we would recommend starting out with smaller rates.
In this review about crypto trading instruments, we went over the availability of trading tools in the crypto market. The results suggest that instruments are available not just for bitcoin, but for other cryptos as well. Both experts and starters can work with these tools, though more experienced traders would benefit the most.
There are also risks associated with these instruments, especially leverage. We advise beginners not to use these functions right away but to educate themselves about the market first.