This article will analyze some of the best cryptocurrency trading exchanges and platforms for margin trading.
In the table below, you can find our listings, and further down, you find some texts and arguments why they are the best margin crypto trading sites.
Best Margin Trading Cryptocurrency Exchanges
In the list and the table below we announce the best margin trading cryptocurrency exchanges for USA and EU with regard to the lowest trading fees, margin interest, available trading pairs, and more.
- Binance is the best cryptocurrency margin trading exchange for EU
- Kraken is the best cryptocurrency margin trading exchange for USA
- Kucoin is offering a peer-to-peer market for margin borrowing and therefor it’s hard to compare the fees.
What is Crypto Margin Trading?
It enables traders to enhance their profits on successful trades as the amount invested can be substantially bigger than what they can realistically afford to trade with.
The word “margin” refers to the amount of trader’s personal funds in his margin account (collateral). So, naturally, the bigger the collateral, the more funds trader can borrow from the exchange to leverage.
What is crypto margin collateral?
Since you are borrowing funds when you do crypto margin trading the borrower needs some kind of insurance to receive these funds. Therefore, you need some assets kept in your margin trading account to cover potential losses. In other words, when you borrow money to trade on margin, your account balance will act as collateral.
There are two different types of collateral
- Cross margin collateral: Margin is shared between open positions with the same settlement cryptocurrency. If needed, a position will draw more margin from the total account balance of the corresponding cryptocurrency to avoid liquidation.
- Isolated margin collateral: Here, each pair is a separate margin account.
What is crypto margin interest?
Margin interest is the interest that is due on loans made between you and your lender.
Example: If you buy Bitcoin for $1000 with 3x leverage you need to borrow $2000. Now, you also have to pay interest on these funds.
How to calculate margin daily interest VS hourly interest?
The margin account interest rate is sometimes calculated on an hourly basis and sometimes every 4 hours (or any other interval).
Kraken charges every four hours while Binance charges every hour.
If the daily interest rate is 0.02%, the hourly interest rate is calculated as 0.02%/24.
The calculation formula: I (interest) = P (borrowed money) * R (daily interest 0.02%/24) * T (in hours)
What is crypto margin roll over fee?
Some exchanges are charging a roll-over fee to keep a crypto margin trading position open.
For example, Kraken charges up to 0.02% (per 4 hours) in rollover fees to keep a margin trading position open.
What is crypto margin opening fee?
Some exchanges are charging an opening fee for cryptocurrency margin trading.
For example, Kraken charges up to 0.02% in the opening fee.
What is crypto margin call?
If a crypto margin trading position is reduced in value, more collateral must be applied to a position (or a reduction of leverage).
Such margin costs can add up quickly. This is called a margin call. The higher the ratio, the faster the margin level can plummet.
Margin Trading Cryptocurrency Fees
Margin trading cryptocurrency fees are charged as
- Spot trading fees (See this article to compare crypto trading spot market fees)
- Margin interest fees
- Opening fees (Charged by Kraken in addition to spot trading fees)
Since we have compared spot trading fees in another article and Kraken is the only platform charging opening fees, we will cover margin interest rates here.
Margin Trading Cryptocurrency Interest Rates
It’s very important to understand the margin trading cryptocurrency interest rates to be profitable.
- Some exchanges announce daily margin interest rates but charge on an hourly basis (For example Binance)
- Other exchanges give their interest rate as a rollover fee charged every 4 hours (Kraken)
- Kraken charges 0.02% every 4 hours in rollover fee for most cryptocurrencies. In addition, they charge 0.02% in opening fees (in addition to spot market fees) for most cryptocurrencies. This will end up in around 0.12% daily margin interest rate (6*0.02%).
- Binance charges around 0.02% daily interest rate for margin trading cryptocurrencies. However, they charge this fee on an hourly basis.
- Kucoin has a peer-to-peer market where you lend funds for margin trading. It means the margin interest rate is dynamic.
The easiest way to compare is probably to calculate the daily margin interest rate and compare.
Crypto Margin Trading Risks
Make sure to start crypto margin trading with small amounts and monitor your positions. Once you have made a few profitable trades and cut a few losses you might be ready to advance.
Still, there are many risks with crypto margin trading. We have summarized some of the risks in the table below. Also, read our general article about crypto trading risk management.