Hong Kong-based cryptocurrency exchange KuCoin announced Friday that traders using the platform will soon have access to margin trading.
The new service will go live on Oct 31, allowing KuCoin users to amplify their trading portfolios by borrowing funds from the exchange. However, details regarding the net leverage traders will enjoy remains unknown as of press time.
KuCoin Margin Trading Launching With 20% Discount
Margin trading is already available in several of KuCoin’s bigger and more established international competitors including Binance, Kraken, Huobi Pro, and BitMEX, among others.
For the uninitiated, margin trading enables traders to borrow cryptocurrencies by depositing their own funds as collateral. For example, if you are margin trading $500 with 2x leverage, you are effectively trading with $1,000 without having to directly incur the expense.
Margin trading is a popular way to amplify gains from market swings. At its optimum, it tends to be temptingly more profitable compared to traditional trading. Aside from that, it also empowers traders with limited funds to march ahead with active and more complicated trading strategies.
Of course, the downside can also amplify substantially if things start going down south — which makes margin trading particularly risky in the absence of an adequate risk-management strategy by the exchange. Should a trader suffer a loss greater than the value of their collateral, they stand to lose the initial investment right away as the exchange will automatically liquidate their positions.
As a promotional tactic, KuCoin has also announced a 20% discount in KuCoin Shares (KCS), the native digital asset on the platform. The discount is available on all margin trades so long as the processing fee is paid using KCS.
Are you excited about KuCoin’s new offering? Do you think margin trading services could help the exchange further reduce the gap with bigger rivals? Let us know your thoughts in the comments below.
Images courtesy of Shutterstock, Twitter.
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