MyFX Markets Crypto Margin Trading
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MyFX Markets is an Australia based broker focused on forex trading, with additional offerings in CFDs covering the cryptocurrency, commodity, and major indices. After its launch in 2013 in New Zealand the company soon relocated to Sydney Australia. While it’s physical operations are located in Australia, it has its regulatory licensing in St. Vincent & the Grenadines.
The forex offerings extend to over fifty different pairs, so there is literally something for everyone. Cryptocurrency trading is a recent addition at MyFX Markets, and they offer the five major digital assets; Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Bitcoin Cash (BCH), and Litecoin (LTC).
The broker is well regarded in the forex community, and we haven’t been able to find much in the way of negative comments or complaints about them online. There have also been no formal complaints against them, so all together it’s a good, solid broker. They are also extremely transparent about their operations, which is refreshing in the forex broker and CFD industry. If there are any client complaints they can be quickly resolved with a phone call to the dedicated support line.
Another positive of trading with MyFX Markets is that they are an ECN broker. That means the broker does not take trades against their clients. Instead all orders are routed through a network of tier 1 liquidity providers, which includes international banks such as Goldman Sachs, JPMorgan, UBS, HSBC, CitiBank, and others.
The Benefits of MyFX Markets
MyFX Markets is proud to be able to offer its services to both beginning and experienced traders. They do this through an easy to understand trading platform, and by offering some of the very best tools, spreads, and margin trading rates.
Of course it also helps that they offer such a broad array of currency pairs, and that they’ve expanded into cryptocurrency trading. Perhaps best of all is the company’s dedication to offering its retail clients the same rapid order processing and accurate quotes that you can find on professional institutional trading desks.
Consider the following six major benefits to using MyFX Markets as a broker:
Fast Execution Times: MyFX Markets uses enterprise grade hardware in the trade servers located in New York and Tokyo.
Expert Advisor Friendly: The broker welcomes EAs and MT4 plugins of all types for automated trading and scalping.
Trustworthy and Secure: Segregated client funds, external audit procedures, strict internal procedures, and government regulation ensure that client funds remain safe with MyFX Markets.
Trade Anywhere, Anytime: Trading is available 24/5 and with the mobile trading platform available across all device types it’s possible to place trades anywhere there’s an internet connection.
Dedicated Customer Support: High quality customer service is important at MyFX Markets, and it is one of the cornerstones of the company’s focus.
Institutional-Grade Spreads: Trading costs remain competitive and low with the institutional-grade spreads offered on currencies, commodities, and CFDs.
All of these great benefits are enhanced by the offer of margin trading at MyFX Markets. If you’re looking for a broker that can offer you the best margin trading experience, look no further.
Trading on Margin at MyFX Markets
Margin trading is when you trade assets using money borrowed from a third-party, typically the broker where you have your trading account. The use of margin in trading allows for the control of far greater positions, which allows traders to leverage their account capital. In practice the use of margin amplifies the results of trading, which means traders can generate larger profits on their successful trades more rapidly than if they didn’t use margin trading.
Margin trading has become extremely popular among forex traders, but it has also been used by equity traders, commodity traders, and more recently by cryptocurrency traders.
As mentioned above, typically funds for margin trading are provided by the broker, and this is the case at MyFX Markets too. Those looking to trade cryptocurrencies on margin are somewhat limited in their options. Cryptocurrencies exchanges are only beginning to offer margin accounts to their clients, and usually the margin available is quite small.
There are also schemes where margin trading funds are provided by other retail traders, who then receive interest payments based on the funds they’ve made available for margin accounts. At MyFX Markets clients can get up to 400:1 leverage on their forex trades, while cryptocurrency leverage is limited to 5:1.
How does Margin Trading Work?
Margin trading is included with all accounts at MyFX Markets. When a trader opens a position using margin they are required to commit a percentage of the order value. This is called the margin, and it is what determines the leverage being used for the trade.
In essence, the margin trading is used to create leveraged positions, with the leverage ratio describing the amount of funds offered as margin compared to the total open position. For example, to open a $10,000 Bitcoin trade with leverage of 5:1 a trader would need to commit $2,000 of their own capital.
Different markets have different accepted margin levels, and different brokers will also offer different margin levels. As mentioned above MyFX Markets offers 400:1 leverage on forex trades, but only 5:1 leverage on cryptocurrency trades.
The lower leverage for the cryptocurrency trades is because the crypto market is already far more volatile when compared with the forex market. That means brokers aren’t willing to increase the risk involved with cryptocurrency trades by offering higher leverages.
A benefit of margin trading is that it can be used when opening both long positions and short positions. In either case the assets in the trader’s account acts as collateral for the capital borrowed to cover the position. It’s important that trader’s understand this, because brokers reserve the right to liquidate trader positions and holdings to cover any open positions in the event the market moves against the trader and the position looks as if it will go negative. U
Usually this liquidation is preceded by a “margin call” where the trader is given the opportunity to deposit additional funds to avoid his open positions being liquidated. If the trader is unable to make additional deposits the broker will liquidate open positions to cover the losses on the margined trade.
Brokers are clear on the margin requirements for positions, so traders should be able to calculate the margin call level for any open trade and protect themselves from a margin call through the use of stop losses.
Advantages and Disadvantages of Margin Trading
The obvious advantage of margin trading, and the reason it is used so widely, is that it can generate far larger profits relative to the value of a trade. For example, in the Bitcoin trade mentioned above a trader would need to offer $2,000 as margin to control $10,000 worth of Bitcoin.
If the price of Bitcoin rises $1,000 to $11,000 it’s a 10% increase in the price. However the trader will realize a 50% profit on his $2,000 margin investment. And that’s using just 5:1 leverage. You can imagine the profits that might be made using 400:1 leverage.
Margin trading is also used by some traders to provide diversification in their accounts. This is because the smaller capital requirement of a leveraged trade allows them to open many positions at once. Finally, traders may find it easier to open large positions more quickly using margin rather than needing to shift large amounts of capital from other accounts to their trading account.
While there are several obvious advantages to margin trading, there are also some pitfalls that need to be avoided, or at least protected against. The most obvious is that not only will margin trading amplify trading profits, it will also amplify trading losses.
In fact, margin trading introduces the risk that the loss on a trade can actually exceed the initial investment. This makes margin trading a high-risk trading method. Depending on the amount of leverage being used, even a small move against a trader’s position can result in a huge loss. This makes it critical for traders who use margin to also use risk management strategies, and risk management tools like the stop-loss order.
CFD-based Crypto Trading
When you’re trading at MyFX Markets you have to remember that you aren’t trading the actual assets. Instead you’re trading derivatives called Contracts for Difference, or CFDs. When trading cryptocurrencies this is actually somewhat of an advantage, simply because buying and selling cryptocurrencies hasn’t yet been made as easy as buying and selling other financial assets.
Those who are interested in holding cryptocurrencies as an investment would want to find a cryptocurrency exchange where they can buy the assets and transfer them to their own wallets. But for those interested in trading to profit based on price movements in the market it can be a disadvantage to buy and take possession of the actual asset. In this case a CFD makes far more sense.
So, CFDs offer traders access to cryptocurrencies without the hassle of owning cryptocurrencies. CFDs also make it possible to enter short positions and profit during bear markets. Some traders even scalp downtrends in much the same way uptrends are scalped, however they typically can’t use EAs to do this as EAs aren’t suitable for short scalping.
CFDs also offer the possibility to use leverage in trading. Without CFDs many brokers don’t offer leverage, or they offer very small, limited leverage. At MyFX Markets the leverage available on forex CFDs is 400:1, which is far greater than you’ll get at non-CFD brokers.
Crypto CFDs can use 5:1 leverage, which is far smaller due to the volatility of cryptocurrencies. It’s still better than cryptocurrency exchanges though, where actual crypto assets are traded, but margin and leverage is typically not offered.
A further benefit to trading CFDs is that they can be used to purchase smaller lot sizes, and there are no regulator imposed limits on day trading. MyFX Markets allows accounts to be opened with as little as $200.
When trading CFDs there are no fees or commissions to worry about. Instead the assets in question are quoted with a spread between the buying price and the selling price. This is completely transparent, and is typically far less costly than models which charge fees and commissions. Spreads vary by asset, but at MyFX Markets they begin at just 0.1 pips for popular forex pairs.
As you can easily see margin trading is a simple way for traders to amplify their trading profits without the need to deposit large amounts of capital. When used carefully margin trading can increase both the profitability and the diversification of a trader’s portfolio.
It is important to understand the risks involved with margin trading too, because it will also amplify any losses suffered on trades. This means risk management becomes increasingly important for those who choose to use margin in an attempt to boost profits. In the case of cryptocurrency trading margin should also be used carefully due to the volatile nature of the cryptocurrency markets.
As a further benefit, margin can be used for both long positions and short positions. This means traders can amplify their profits when the market is rising, or when it’s falling. Margin trading isn’t suitable for everyone, but it is a useful tool for those who understand it and are able to use it properly.