Kraken Digital Asset Exchange which own one of the largest and oldest bitcoin exchanges has just launched margin trading of Bitcoin Cash (BCH) and Ripple (XRP) to its platform. This brings the company’s margin offerings to 8 assets that include, Bitcoin (XBT), Ethereum (ETH), Ethereum Classic (ETC), Augur (REP), Monero (XMR) and Tether (USDT).
The announcement also said that Kraken clients can margin trade on old platform (kraken.com) and the new Kraken platform (https://trade.kraken.com) which now have improved user interface as well as integrated charts and tools features. The new platform also supports mobile trading.
Kraken also notes:
Please note that BCH and XRP are not collateral currencies. This means you cannon 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.
According to Kraken, margin trading lets users leverage their accounts for greater profits, while at the same time assuming greater risk. It encourages users to learn more about margin trading and its benefits through the company’s Support Center.
It also issues a warning that although margin trading can bring more profit, it can also lead to bigger losses. Such losses can be large enough to forcibly close margin positions to protect funds you borrowed to open the positions.
This means that you may be forced to take a large loss on a trade rather than having the option to try and wait for a more favourable price.
So while Kraken encourages users about margin trading it’s also quick to warn about its dangers. It would be best to fully understand then, how margin trading works and what are the risks.