The United States-based cryptocurrency exchange Kraken has added Bitcoin Cash and Ripple to its margin trading services. Margin trading function allows the users to trade with the funds which they do not actually possess. Margin trading leverage the users’ accounts. It can not only lead to greater profits but also can amplify losses.
The exchange is already offering margin trading services to six cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), Ethereum Classic (ETC), Monero (XMR), Augur (REP), and Tether (USDT). After adding Bitcoin Cash (BCH) and Ripple (XRP) the service will be available for total eight cryptocurrencies. According to the exchange,
“Please note that BCH and XRP are not collateral currencies. This means you cannot open margin positions against the value of your BCH or XRP balances. For this reason, you should always maintain adequate balances of other collateral currencies to maintain your margin positions.”
The borrowing limit will depend on the verification level of the account. Yesterday the exchange posted a blog on its website regarding the details of the new launch. According to the blog, for different currency pairs, the available leverage amount is different. You can check the details in the blog. Margins open fee is 0.02% while rollover fee is 0.02% / 4 hours.
In the blog, the exchange also warned its users about the danger of high-risk margin trading. According to the exchange, if unrealized losses are huge, the margin positions can be forcibly closed to protect the funds which users have borrowed to open the positions. It means the users can be forced to take a large loss on trade rather than waiting for a much favorable price. The exchange recommended maintaining a healthy account balance to back margins.
The exchange also requested the users to take time to fully understand the margin trading and how it works so that the users can know about the risk involved with margin trading. The users can also clear their doubts via Kraken’s knowledge base or support center.