Giant cryptocurrency exchange, Binance has signed up more than ten thousand customers following the launching of its new margin trading features.
Binance CEO, Changpeng Zhao, more commonly known as CZ expressed his opinions on this system of trading. He remarked that the immense recognition that margin trading has received on the Binance platform was a credit owed to retail traders. He indicated that institutional demands weighed lesser than its retail counterpart. In CZ’s word,
“We have not seen institutions growing faster, …” “What we’ve seen is a pickup in both places. The number of institutions coming into this industry has not increased that tremendously in 2019 yet.”
Institutions Versus Retailers
Many have come to believe in the influence brought about in the cryptocurrency industry by institutional traders to be responsible for the recent market upswing. Binance’s boss maintained that a larger part of the traders registered on one of the biggest online exchanges in the world, Binance is retail investors.
What Is Margin Trading?
Trading margin seems to be the new gold mine in cryptocurrencies trading. This system of trading exposes investors to the opportunities of trading with more money or funds than the originally own. It is just like borrowing money to buy securities. Margin, therefore, is the difference between the amount borrowed from a broker and the original amount owed by the investor or trader.
Traders take advantage of this system to maximize profit and make huge gains. While this can be very impressive, it can also spell doom, especially for “wet behind the ears” investors and traders who get caught in the moment!
Don’t Get Burnt
Recently, CZ warned investors on how to behave responsibly during trading activities. At the time, the exchange had just executed its first margin liquidation on a BTC short position. This was one instance in which margin traders were highly encouraged to be responsible with their money. Another instance reported a trader who committed suicide owing to the loss of some huge amount during margin trading last month.