Key Takeaways
- Leverage trading (also called margin trading) involves borrowing crypto to be able to control a higher position than you could with your own capital;
- Most of the popular exchanges, such as Binance, Kraken, Bybit, and KuCoin, offer a user-friendly trading platform with both isolated and cross margin and up to 10x leverage;
- When starting out, invest smaller sums with modest leverage, stick to isolated margin, and avoid opening too many positions at once.
Ace quick missions & earn crypto rewards while gaining real-world Web3 skills. Participate Now ! 🔥
Spot trading is the bread and butter of crypto investment strategies – but if you’ve already mastered it and feel ready to raise the stakes and make room for higher profits, there’s another type of trading you might want to give a go! In this guide, I’ll break down the process of how to leverage trade crypto on the crypto community’s favorite centralized exchanges.
Leverage trading has become a staple for many crypto enthusiasts, and for a good reason: it lets you boost your trading profits by investing more crypto than you currently own through utilizing borrowed funds at a certain ratio.
If this sounds a bit intimidating, let's take it one step at a time. I will explain how leverage crypto trading works, with some best tips and tricks for beginners and detailed guides on how to trade crypto with leverage on Binance, Kraken, Bybit, and KuCoin.
Did you know?
Subscribe - We publish new crypto explainer videos every week!
What is Tezos? XTZ Cryptocurrency Easily Explained (ANIMATED)
Table of Contents
- 1. How to Leverage Trade Crypto: Step-by-Step Guides
- 1.1. Leverage Trading on Binance
- 1.2. Leverage Trading on Kraken
- 1.3. Leverage Trading on Bybit
- 1.4. Leverage Trading on KuCoin
- 2. How to Choose the Best Crypto Exchange for Leverage Trading
- 3. What is Leverage Trading in Crypto? A Quick Introduction
- 3.1. How Does Leveraged Trading Work?
- 3.2. Types of Margin
- 4. First-Time Tips & Tricks for Leverage Crypto Trading
- 5. Conclusions
How to Leverage Trade Crypto: Step-by-Step Guides
Learning how to trade crypto with leverage doesn't have to take ages – with the right direction, you can dive into it straight away! Which is exactly what I’ll try to provide here. In this section, you’ll find out the exact process with step-by-step instructions and discover what each of the 5 exchanges offers for this type of trading.
Latest Deal Active Right Now:Score up to $200 in BTC or USD – just sign up and make your first crypto purchase to get a go at the Reward Wheel. Instant spin. Instant reward. Follow this Coinbase referral link to activate the deal!
Leverage Trading on Binance
As of writing this, Binance is one of the largest and most popular centralized crypto exchanges, with over 270 million users worldwide and a daily trading volume of over $5 billion. It offers plenty of benefits for both beginner and experienced crypto enthusiasts who want to get into leverage trading:
- Types of Margin. Binance offers 3 types of margin: Isolated Margin (up to 10x leverage), Cross-Margin (up to 5x leverage), and Cross Margin Pro (up to 20x leverage; includes negative equity protection).
- Trading Pairs. You’ll find over 700 margin pairs on the spot market, supporting leveraged long and short positions to capitalize on both rising and falling prices.
- Margin Easy Mode. A simplified interface for margin trading with automated borrow and repay functions.
- Borrowing Limits. In Isolated Margin, the borrowing limits are tiered based on the user’s VIP level, the tier of the position, and the leverage selected by the user. In Cross Margin, they’re tiered based on the user's VIP level, while in Cross Margin Pro, they’re tiered according to the leverage used.
- Liquidation Rates. The default Margin level on Binance is 999 (Margin Level = Total Asset Value / (Total Borrowed Amount + Unrepaid Interest). If it reaches 1.16, a margin call is issued, and once it gets to 1.1, the position is liquidated.
📚 Check Out: Guide to Margin Trading on Binance
Without further ado, let me show you how to leverage trade crypto on Binance:
Make sure you’ve passed the KYC verification – you won’t be able to do margin trading without it.
If you choose [Borrow], the system will automatically borrow the maximum available amount for your available leverage. To borrow manually, click [Borrow/Repay] and enter the amount you want to borrow.
This is it! Now that you’ve opened a position, don’t forget to keep checking your margin level and make adjustments as needed. The Margin section of the Assets tab contains a handy dashboard of the entire situation of your Margin account for a quick overview.
If you want to learn how to leverage trade crypto in the US, you’ll have to use an exchange platform like Kraken, since Binance isn’t available in the United States.
Leverage Trading on Kraken
Kraken is another solid choice for your first foray into leverage trading. This exchange has a user base of over 13 million across 190 countries. Unfortunately, North American users get the short end of the stick here, since margin trading isn’t supported there (so if you’re looking into how to leverage trade crypto in Canada or the US, Kraken is out of the picture).
For a more interactive, hands-on tutorial, try Kraken's Margin Trading Mission on BitDegree, with a chance to win up to 200 USDC!
Let’s take a look at the key features of Kraken’s margin trading platform:
- Types of Margin. Kraken offers Cross and Isolated Margin.
- Trading Pairs. There are over 200 markets available for margin trading, with up to 5x leverage.
- Fees. Opening a leveraged position has a fee of 0.02% - 0.04%, and the same fee is then applied every 4 hours to maintain it.
- Liquidation System. On Kraken, the margin call level is approximately 80%, while the margin liquidation level is ~40%.
- Borrowing Limits. Margin limits on Kraken vary by trading pair. For example, the BTC/USD pair has a long limit of 300 BTC and a short limit of 240 BTC.
📚 Check Out: Guide to Margin Trading on Kraken
Here’s how to leverage trade crypto on Kraken’s web version:
Make sure you’ve passed KYC verification first.
Pay attention to the Portfolio Leverage and the Margin Health indicators below – the higher the amount you want to trade, the higher your leverage will be, and the lower your Margin Health will become.
All done! You can see your order on the [Positions] tab on the bottom panel. To get an overview of your entire Margin account and currently open positions, head over to [Portfolio] on the left-side menu bar and click [Margin].
Leverage Trading on Bybit
Bybit’s large cryptocurrency selection, low fees, and reliable customer support make it one of the best options for leverage trading. It has over 70 million users globally, but, once again, American residents get shafted because of regulatory issues.
That said, if you’re in one of the Bybit-supported countries, this exchange has quite a lot to offer in the leverage trading department:
- Types of Margin. Bybit only has cross-margin for spot margin trading.
- Leverage. You can choose between 500+ trading pairs with up to 10x leverage.
- Demo Trading. Bybit stands out among this list of exchanges by offering demo trading with leverage.
- Maintenance Margin. For non-VIP users, the maintenance margin rate is 0.5%
- Liquidation System. On Bybit, the margin call level is triggered when the Loan-to-Value (LTV) ratio reaches 85%. If the LTV continues to rise and exceeds 92%, your position will be liquidated.
Let’s take a look at how to leverage trade crypto on Bybit:
Don’t forget to pass KYC verification before attempting to trade.
If you picked Cross Margin, there’s an option to select which cryptocurrencies on your portfolio can be used as collateral.
This is it! You’ll see your order in the panel below.
Leverage Trading on KuCoin
There’s plenty to like about the KuCoin exchange: it offers 400+ trading pairs, competitive fees, and advanced order types, all wrapped up in an intuitive and user-friendly interface. When it comes to the question of how to trade crypto with leverage, here’s what KuCoin has on the plate:
- Types of Margin. KuCoin offers both Cross Margin (with up to 5x leverage) and Isolated Margin (with up to 10x leverage).
- Auto-Borrow & Auto-Repay. Automatically place orders with the maximum borrowable amount at the current leverage multiplier or use the assets from filled orders to repay any outstanding liabilities.
- Liquidation Rates. When the debt ratio reaches 95%, you’ll receive a margin call alert, and if it goes up to 97%, your position will be automatically liquidated.
- Margin Interest Rates. KuCoin charges 5% of your accrued interest as fees and 10% as the insurance fund.
- Borrowing Limits. The maximum amount of borrowable assets is 4x the total assets in the cross margin account.
Follow these steps to learn how to leverage trade crypto on KuCoin:
If you haven't passed the KYC verification yet, get this over with first so that you're eligible for trading.
All done! All you have to do now is keep track of your positions.
How to Choose the Best Crypto Exchange for Leverage Trading
All of the five above-mentioned exchanges offer a solid and reliable leverage trading platform, but if you’re having a hard time settling on one or another, here’s a handy list of key factors to consider:
- Maximum Leverage Available. Most exchanges that support margin trading offer a leverage of up to 5x for most pairs, which should be more than enough for complete beginners, but if you’re anticipating higher needs down the road, some platforms support leverage as high as 200x for futures trading.
- Margin Modes. Isolated margin is more common than cross margin, but the best exchanges typically offer both types.
- Margin Interest Rates. The higher leverage you’ll want, the higher your margin interest rate will be. Some exchanges charge them on an hourly basis, while others charge on a daily basis.
- Liquidation Mechanism. Look for partial liquidation or tiered margin systems — they can save you from full liquidation.
- Real-Time P&L & Margin Tracking. Make sure the platform lets you monitor unrealized P&L (Profits and Losses), margin usage, and liquidation price in real time.
- Asset Support. A lot of exchange platforms only support leverage for the most popular coins like BTC and ETH. If you want more flexibility, look for platforms with a higher selection (but keep in mind that you’re unlikely to find high leverage options for altcoins and meme coins).
- Risk Controls. You should be able to manually adjust leverage during a trade and set stop-loss and take-profit orders.
- Demo Trading. If you’d rather ride with the training wheels on first, some exchanges have a demo trading feature that lets you practice with virtual funds until you get the hang of it.
Aside from these leverage trading-specific factors, don’t forget to take into account the general features and characteristics of the exchange in question, such as security, user-friendliness, and customer support. Geographical availability is another common hurdle: for example, if you're looking at how to leverage trade crypto in Canada, there are only a small handful of options available, such as Coinbase.
📚 Check Out: Best Crypto Margin Trading Exchanges
Looking for more in-depth information on related topics? We have gathered similar articles for you to spare your time. Take a look!
.jpg?tr=w-400 "Bybit Fees Explained: A Comprehensive Breakdown")
What is Leverage Trading in Crypto? A Quick Introduction
In a nutshell, leveraged trading means opening trading positions with a combination of your own funds and borrowed ones. The main benefit is self-explanatory: this allows you to control positions much larger than your initial investment.
Did you know?
Subscribe - We publish new crypto explainer videos every week!
What is ENS? Ethereum Name Service Explained (ANIMATED)
How Does Leveraged Trading Work?
Let’s say you have $200 in your account and want to trade Bitcoin. Instead of only putting down $200, you pick the option of 5x leverage, which turns your total investment into a $1,000 position – that’s $800 saved down the road (initially, at least).
The number one thing to know about leverage trading is that it amplifies both profits and losses. In the former scenario, if, say, the price of BTC goes up 10%, your $1,000 position increases by $100. Since you only put in $200, you just made a 50% gain on your actual capital! However, if the price of BTC falls by the same 10%, your $1,000 position loses $100, and you now only have $100 left out of your initial $200 investment.
Before going any further, I want to clarify the distinction between certain two concepts. You’ve probably heard the terms “leverage trading” and “margin trading” used interchangeably – this isn’t incorrect per se, as they both refer to the same thing when it comes to crypto trading in particular.
However, in this case, “leverage” means the amplification effect, that is, the ratio of your own funds vs borrowed funds, while “margin” specifically means the collateral (your own crypto funds) you deposit to open and maintain your position. If this margin balance falls below the agreed maintenance margin, your position will get liquidated to prevent further losses.
There are several types of liquidation. You can choose to partially or fully liquidate your position anytime (voluntary liquidation), while forced liquidation happens when the exchange itself closes your position and sells your collateral to cover your losses (this usually involves a liquidation fee). And if your collateral isn’t enough, the remaining debt is paid by the exchange’s insurance fund.
There’s one more last-ditch trick exchanges have up their sleeves for when this doesn’t suffice, however: Auto-Deleveraging (ADL). It usually kicks in during market crashes or other black swan events (such as the memorable "Black Thursday" in 2020, when the Bitcoin price plummeted by more than 50% within 24 hours[1]). Traders with the highest profits and leverage are the first in line for getting their positions forcefully closed.
Exchanges like Binance show an ADL indicator next to your position to keep you informed on how close you are to getting auto-deleveraged.
One last thing I should mention is that leverage can be applied to multiple types of trading. So far, I’ve only discussed how it works with spot margin trading, but the mechanism for perpetual futures trading is a bit different.
Since future trading involves buying or selling contracts, not crypto itself per se, there’s no borrowing of funds involved – the leverage is built into the contract itself, and the upper limit is often much higher than for spot margin trading. Instead of interest, you pay (or receive) funding fees – periodic payments between traders (not to the exchange itself) designed to keep the futures price in line with the spot market price.
📚 Check Out: What is Leverage Trading in Crypto?
- Secure and reliable
- Accepts fiat currencies
- Lots of trading options
- Reputable exchange
- Accepts fiat currencies
- Offers various trading options
- Accepts fiat currencies
- Simple to use
- Supports only trusted cryptocurrencies
- A leading cryptocurrency exchange platform
- Best for all type investors
- Accepts fiat currencies
- Beginner-friendly
- Secure
- Decent trading and withdrawal fees
- Crypto.com Visa Card
- Automated tools & bots
- Ecosystem synergy with CRO
Types of Margin
If you’ve decided to give leverage trading a try, there are two distinct approaches you could go for: isolated margin and cross-margin. They both have unique advantages and are better suited for different markets, scenarios, or types of traders:
Factor | Cross Margin | Isolated Margin |
|---|---|---|
Definition | Uses the entire account balance to support all open positions. | Uses only the allocated margin for each individual position. |
Margin | Higher: the entire account balance can be used to support one position that needs it. | Lower: each position’s margin is isolated and not shared. |
Level of Control | No manual adjustment: the platform automatically distributes more margin to positions that are losing money, or vice versa. | Complete control: you decide a specific margin level for each individual position. |
Risk Exposure | Higher: the entire account balance is at risk. | Lower: only the allocated margin for each position is at risk. |
Management Complexity | Higher due to the need to monitor overall account health. | Lower, with simpler risk management for each position. |
Responsiveness to Market Movements | Higher: margin gets distributed automatically as soon as the situation changes. | Lower: positions need to be managed manually. |
Margin Calls | Affect the entire account, potentially causing liquidation of all positions. | Affect only the individual position, preventing a domino effect. |
Suitability for Beginners | Less suitable due to higher complexity and risk. | More suitable due to better risk control. |
Table: Comparison of cross and isolated margin
If you’re a beginner, I’d definitely recommend sticking with isolated trading at first. Later on, if you’re feeling ambitious, you could venture into cross-margin trading.
First-Time Tips & Tricks for Leverage Crypto Trading
Mastering how to leverage trade crypto can take months or even years – but there’s no reason you couldn’t get started right away with just a few essential tips under your belt. Now that you know the gist of how to leverage trade crypto on Binance and other A-list crypto exchanges, here are some pointers to help you make the most out of it while keeping the danger at bay:
- Start With Lower Leverage. When you're just starting out, the best leverage for crypto trading is somewhere between 2x and 5x. Later on, 5x to 10x is often the sweet spot for balancing risk and reward.
- Avoid Highly Volatile Coins. Prioritize more established cryptocurrencies that are less subject to violent market swings, such as Bitcoin or Ethereum, and avoid meme coins or brand-new tokens.
- Use Demo Accounts. Some crypto exchanges offer demo trading that lets you practice with virtual funds instead of having to risk your own – think of this like an interactive tutorial session.
- Set Stop-Loss Orders. Don’t rely on manual exits — fast-moving markets won’t wait! Utilize stop-loss orders that will automatically sell a crypto token when it hits a certain price point so that your margin doesn’t get too low.
- Diversify Entry Points. Don’t open multiple positions in assets that tend to move together (for example, changes in the price of BTC often affect ETH and vice versa[2]) to avoid the negative domino effect.
- Avoid Overtrading. If you’re using cross-margin, don’t open too many positions at once – it increases liquidation risk for all of them.
- Enable Alerts. Keeping track of the price movements and your margin situation manually can get tricky. Use platform alerts to track price movements and margin health (some platforms let you get warnings when you're close to liquidation).
- Stick to a 2:1 Risk/Reward Ratio. The risk/reward ratio compares how much you're willing to lose (risk) to how much you aim to gain (reward). A poor entry or weak setup with bad risk/reward can quickly lead to liquidation, while a high-probability setups with good R/R give you room to be wrong and still win overall.
As long as you keep this in mind, there’s no reason not to add leverage trading to your arsenal and take it out for a ride. All you need to do is be willing to set aside some time and effort to keep an eye on your positions and have a reliable strategy in mind.
Browse our collection of the most thorough Crypto Exchange related articles, guides & tutorials. Always be in the know & make informed decisions!
Conclusions
The one thing you should take away from this guide on how to leverage trade crypto is that it’s more about the journey than the destination! There are a lot of nuances to grasp, and some will only start to make sense once you have some experience under your belt.
As with all things crypto, it’s best to start small and work your way up. Pick isolated margin for your first attempts, choose a low leverage (2-5x), and keep close tabs on your positions. Once you get the hang of it, you can branch out to cross trading and play around with higher leverage.
The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice. BitDegree.org does not endorse or suggest you to buy, sell or hold any kind of cryptocurrency. Before making financial investment decisions, do consult your financial advisor.
Scientific References
1. Cheng Z., Deng J., Wang T., Yu M.: 'Liquidation, Leverage and Optimal Margin in Bitcoin Futures Markets';
2. Sifat I. M., Mohamad A., Shariff M. S. B. M.: 'Lead-Lag relationship between Bitcoin and Ethereum: Evidence from hourly and daily data'.
About Article's Experts & Analysts
