HitBTC is a cryptocurrency exchange with a long history, wide functionality, and a rich set of supported coins. Today, this platform is one of the exchanges offering its users a feature of margin trading. On HitBTC, traders can choose from dozens of pairs with leverage varying from 3x to 12x. The platform's mobile app can be used for margin trading, too. It gives a rare opportunity of using margin trading afoot. In this article, we will review the main characteristics of margin trading on HitBTC.
- What Is HitBTC?
- What Is Margin Trading?
- Available Trading Pairs
- Main Characteristics
- Perpetual Futures Feature
What Is HitBTC?
HitBTC was founded in 2014. The exchange is registered in Seychelles and has offices in the UK and Chile. The platform offers one of the widest sets of supported cryptocurrencies. There are over 400 coins supported on HitBTC. There are over 900 trading pairs to choose from. As for liquidity, HitBTC is one of the top 50 exchanges by trading volume. Currently, the exchange is not available in North Korea, Sudan, Syria, Cuba, and Crimea. In 2019, the exchange had to cease its operation in the United States of America.
One of the selling points of HitBTC is low trading fees. The registered users are charged with a 0.09% fee per transaction. Starting with the individual monthly trading volume of 10 BTC users pay smaller commissions. Market makers with volume surpassing 20000 BTC don't pay fees at all.
Apart from posting all kinds of orders and analyzing the charts, users on HitBTC can use additional functions. The exchange provides such options as buying crypto for fiat money, OTC trading service, and so on. In 2020, the exchange provided the feature of margin trading.
What Is Margin Trading?
Margin trading is a trading strategy that emerged quite a long time ago in the stock market trading sphere. In cryptocurrency trading, it has some unique characteristics to it so we will focus on margin trading in crypto. The margin trading strategy supposes that a trader is lending some money from the exchange (sometimes, from a broker) and trading with a larger amount of money during the specified period of time. The margin provided by the exchange is protected by the deposit (collateral) paid by the trader. If her/his trades are profitable, the trader enjoys extra profits, gives the lent money back to the exchange, pays the fee, and tallies a win.
Let's see how it works. For example, you believe that Litecoin is going to grow from 200 USDT to 220 USDT soon. You have 1000 USDT to trade. On HitBTC, you might open a 10x long LTC position to boost the potential profit ten times. You pay 1000 USDT as collateral and post a 10,000 USDT order. You get 50 litecoins at 200 USDT each. If your prediction turns out to be correct you sell 50 LTC at the 220 USDT prices. What you get at this point is 11,000 USDT. You return the borrowed money (9k USDT). Considering the collateral, your profit before the margin fee and interest rate is charged is 1000 USDT — something you wouldn't have made investing only 1000 USDT. Margin trading can be used for short sell positions, too.
However, margin trading is a risky enterprise. If the market behaves opposite to your expectations you might lose the initial investment or even more if you have been adding extra money to increase the collateral while the margin position was open. The exchange won't let any of the money lent to you be lost. If the prices move in the way that your order seems to bring losses, the exchange will send a so-called "margin signal" demanding to increase the collateral or simply will close your position. In this case, you will lose what you have invested. Starting margin trading without a clear understanding of the current market trends is not recommended.
Available Trading Pairs
Right now HitBTC supports the following margin trading pairs:
3x leverage: TRX/ETH, XMR/ETH, DASH/ETH, XLM/ETH, ZEC/ETH, ADA/ETH, MKR/ETH, XRP/EOS, TRX/EOS, XMR/EOS, LTC/EOS, DASH/EOS, XEM/EOS, and NEO/EOS.
5x leverage: XTZ/USDT, BSV/USDT, ZEC/USDT, DASH/USDT, TON/USDT, XLM/USDT, NEO/USDT, VET/USDT, DOGE/USDT, BSV/BTC, ZEC/BTC, DASH/BTC, XLM/BTC, NEO/BTC, VET/BTC, DOGE/BTC, XTZ/BTC, and TON/BTC.
10x leverage: EOS/USDT, TRX/USDT, LTC/USDT, ETC/USDT, ADA/USDT, XMR/USDT, EOS/BTC, TRX/BTC, LTC/BTC, ETC/BTC, ADA/BTC, XMR/BTC.
12x leverage: BTC/USDT and ETH/USDT.
Main Characteristics
One of the nice features of margin trading on HitBTC is that the service can be accessed via the mobile app. As of 2021, there are not many exchanges that offer such a feature as margin trading but even fewer support this function in their mobile apps.
Dear Traders,
— HitBTC (@hitbtc) January 2, 2021
Have you checked out the HitBTC mobile apps yet?
Enjoy trading on our exchange through the comfort of your handheld device.
? Download the app on:
? Android - https://t.co/5sHuammd96
? & IOS - https://t.co/Cyo7g3xs0n pic.twitter.com/zwTQOJnxm8
As long as the margin position stays open the trader is paying a daily interest rate which is different depending on the currency. For most currencies, this rate is 0.021%. The highest rates are set for Monero (XMR) and Tether (USDT). The rate is 0.081%. The interest is charged in the quote currency three times a day. Position liquidation fee is 0.5%. It is paid in the quote currency. There are borrowing limits that are different for the short and long positions of each pair. For instance, for a BTC/USDT pair, the borrowing limit for short positions is 40 BTC. For long BTC/USDT positions the limit is 2,000,000 USDT.
Perpetual Futures Feature
In September of 2021, HitBTC introduced a new feature allowing traders to use leverage. The new feature is called Perpetual Futures. It is available for the following coins: BTC, ETH, TRX, BCH, ADA, DOT, SOL, EOS, AAVE, MATIC, XLM, UNI, LTC, and HIT. Trading perpetual futures allows HitBTC clients to use up to 75x leverage via isolated margin. The latter means that the collateral asset can be removed or added by traders so that leverage can be altered at certain positions.
Unlike regular futures contracts, perpetual futures are less risky as traders have more opportunities to manage risks. Perpetual contracts don't have an expiration date so the positions can stay open as much time as traders wish.