Margin Trading Bitcoin UK – Learn How to Trade Bitcoin on Margin
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If you have a slightly higher appetite for risk – you might consider trading Bitcoin (BTC) on margin. This will allow you to trade Bitcoin with more capital than you have in your account.
However, you should know that in January 2021 – the FCA banned crypto-centric margin trading for retail investors – meaning that leverage facilities are now only available for professional clients.
If you do fall within the remit of a professional client, this guide on Margin Trading Bitcoin UK will discuss the best brokers for the job, what limits are available, and how you can get started today.
Table of Contents
#1 Broker for Bitcoin Margin Trading UK – eToro
How To Trade Bitcoin on Margin UK – Choose a Broker
Below you will find a list of the best brokers that support Bitcoin margin trading in the UK.
- eToro – Overall Best Bitcoin Margin Trading UK Broker
- AvaTrade – Top-Rated MT4 Broker With Bitcoin Margin Facilities
We’ll discuss each of the above brokers in detail further down in this guide.
Bitcoin Margin Trading UK – A Quick Guide For 2022
If you fall within the scope of a professional client and wish to start your Bitcoin margin trading journey right now – follow the quickfire guide below.
- Step 1: Open a Professional Account with eToro – The best broker for Bitcoin margin trading in the UK is eToro. This FCA-regulated broker offers super-low trading fees alongside Bitcoin leverage. You will need to open a professional account with eToro to gain access to margin facilities. This will require some personal information and background data on your trading experience.
- Step 2: Upload Documents – Another requirement to open a professional client account with eToro is to upload some supporting documentation. This includes documents that prove you meet the scope as a professional trader.
- Step 3: Deposit Funds – Once your professional account has been approved by eToro, you can then proceed to make a deposit. The broker supports debit/credit cards, bank account transfers, and e-wallets.
- Step 4: Choose Bitcoin Market – eToro supports a wide range of Bitcoin markets – all of which you can trade on margin. You can search for the pair that interests you (e.g. BTC/GBP) or browse the crypto asset library to see what is available.
- Step 5: Trade Bitcoin on Margin – Finally, you can now proceed to place your trade. Enter your specifics – such as your stake, leverage amount, and limit, stop-loss, and take-profit order prices before clicking on ‘Open Trade’.
And that’s it – you’ve just placed your first Bitcoin margin trading order in the UK with eToro!
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. 67% of retail investor accounts lose money when trading CFDs with this provider.
Best Bitcoin Margin Trading UK Brokers – Full Reviews
If you want to trade Bitcoin on margin in the UK – you will need to have a suitable broker by your side. Your chosen broker must not only offer sufficient levels of leverage for your experience and trading strategy – but it must be regulated by the FCA. You also need to consider factors surrounding fees, spreads, and commissions – as well as the availability of trading tools such as technical indicators and MT4.
Taking all of these factors into account – below we review the best brokers that support Bitcoin margin trading in the UK.
1. eToro – Overall Best Bitcoin Margin Trading UK Broker
We found that the best brokerage firm offering Bitcoin margin trading facilities in the UK is eToro. This popular trading platform is used by over 20 million people and has grown so quickly since its launch in 2007 that it plans to go public later. eToro is authorized and regulated by the Financial Conduct Authority (FCA) – so the broker must comply with all relevant laws surrounding leverage. That is to say, if you want to trade Bitcoin on margin at eToro – you must open a professional client account.
Once you have done this, you will have access to a wide range of Bitcoin markets. For instance, eToro supports a plethora of fiat-to-crypto pairs – such as BTC/USD, BTC/GBP, BTC/EUR, and BTC/JPY. If you also have an interest in crypto-cross pairs, eToro supports plenty of markets. This includes the likes of BTC/XLM, ETH/BTC, and BTC/EOS. If you are interested in trading other cryptocurrencies on margin, eToro offers heaps of other digital tokens.
In terms of margin limits, this will depend on the specific pair that you wish to trade. For example, if you trade BTC/USD – which is the most liquid pair in the crypto industry, you will likely benefit from higher limits than other digital currencies. Interestingly, even on a professional client account, there is negative balance protection. This means that in the rare occasion your trading balance goes below zero, eToro will cover the losses. When it comes to fees, eToro operates as a spread-only brokerage firm.
This means that instead of paying a traditional commission, you simply need to cover the spread. This starts at 0.75% on BTC/USD but may be slightly higher on less liquid pairs. Getting started with eToro is very straight forward and you can easily deposit funds with a debit/credit card, e-wallet, or bank account. We should also note that eToro offers margin trading on other popular asset classes – which includes thousands of stocks and ETFs, indices, hard metals, energies, and forex.
Pros
- Professional client accounts
- Invest in cryptocurrencies on a spread-only basis
- Buy thousands of UK and international stocks at 0% commission
- Minimum investment per trade from just $25
- Supports debit/credit cards, e-wallets, and local bank transfers
- Regulated by the FCA, CySEC, and ASIC
- Used by over 20 million people
- Social and copy trading tools
Cons
- Perhaps too basic for technical traders
- No support for MT4 or MT5
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. 67% of retail investor accounts lose money when trading CFDs with this provider.
2. AvaTrade – Top-Rated MT4 Broker With Bitcoin Margin Facilities
Once your account has been approved, you can then add some funds with a debit/credit card or bank transfer. In doing so, you can then trade Bitcoin on margin – with the broker offering huge liquidity levels of BTC/USD. Other supported cryptocurrencies offered by AvaTrade include Bitcoin Cash, Ripple, Ethereum, EOS, Litecoin, and Dash. All these digital tokens can be traded against the US dollar. AvaTrade offers a maximum leverage limit of 1:20 when trading Bitcoin.
When it comes to fees, this is where AvaTrade really stands out. This is because the brokerage site offers 0% commission trading on all of its supported markets. This means that you only need to cover the spread when entering and exiting your chosen market. We found that in most cases, AvaTrade spreads are very competitive. Other supported markets at AvaTrade include stocks, indices, ETFs, and commodities – all of which are represented by leveraged financial derivatives.
This means that AvaTrade is a great option for attempting to profit from both rising and falling markets. For example, if your in-depth research points to an impending price reduction on Bitcoin price, you can easily place a sell order to profit from this. Once you have your account set up, AvaTrade allows you to trade via MT4, MT5, or its own native platform. All three options are great for advanced traders – not least because you’ll have access to plenty of technical indicators, chart drawing tools, and real-time market data.
Pros
- Regulated in seven jurisdictions
- 0% commission on all supported markets
- Offers spread betting and CFD instruments
- Minimum deposit of just £100
- Free demo account
- Supports MT4 and MT5
Cons
- Spread betting department limited to just 200+ financial markets
- Mobile app is a bit cumbersome to use
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money
Bitcoin Margin Trading UK – Who is Eligible?
Before we get to the specifics of how Bitcoin margin trading works, it is important for us to explain the regulations behind leveraged cryptocurrency products. This is because in January 2021 – the FCA updated its stand on retail investor clients being able to access crypto-centric margin trading markets.
That is to say, retail investors in the UK can no longer trade Bitcoin – or any digital currency for that matter, on margin. This means that leveraged Bitcoin positions are only available to professional clients.
What is a Professional Client?
As the name suggests, professional clients are traders that invest in a ‘professional’ capacity. This means that they typically have lots of experience in trading financial instruments – alongside a suitable amount of capital at their disposal.
In the UK, the FCA requires brokerage firms to verify whether an individual should be classed as a professional client. In fact, there are three metrics in particular that brokers must look at – two of which must be met to open a professional trading account.
This includes the following:
Portfolio of Assets
The first metric stipulated by the FCA is that professional clients must have a portfolio of assets that exceed €500,000 (approximately £430,000). This can be a mixture of financial instruments (e.g. equities) and cash deposits.
Trading Activity
The FCA also requires you to have sufficient levels of prior trading experience to qualify as a professional client. More specifically, you need to have traded an average of no less than 10 positions per quarter for the past four consecutive quarters. It goes without saying that this is by far the easiest metric to meet.
Trading Experience
The third metric stated by the FCA is that professional clients must have worked in the financial sector for at least one year in a “professional position”. This particular metric is somewhat subjective – so you might find that brokerage firms interpret this in different ways.
How Does Bitcoin Margin Trading Work?
If you think that you meet at least two of the aforementioned three criteria set out by the FCA, then there is every chance that you will be eligible to open a professional client account. If this is the case, then you can start your Bitcoin margin trading journey.
However, margin trading increases both the potential rewards and risks by a considerable amount – so it’s important that you understand how leveraged financial products work before you get started.
The Basics of Bitcoin Margin Trading UK
In its most basic form, if you trade on margin, this means that you are amplifying the value of your position by a certain ratio. In many cases, you might be trading with a lot more than you actually have available in your brokerage account.
For example:
- Let’s say that you have £1,000 in your brokerage account
- You want to trade Bitcoin on margin and decide to apply a limit of 1:20
- This means that you are trading with 20 times the value of your stake
- In other words, your £1,000 stake has now been boosted to £20,000
The main attraction of Bitcoin margin trading in the UK is that you can buy and sell this digital currency with much higher stakes. On the one hand, this means that you have the chance to make considerably higher profits than your current account balance permits. However, this also means that you are increasing the risk of loss.
Bitcoin Trading – Maring vs Leverage
You might have noticed that we have used the terms ‘margin’ and ‘leverage’ throughout this guide thus far. Although the two terms refer to a similar outcome, there is actually a difference in what they mean.
- In simple terms, leverage refers to the ratio that traders wish to amplify their stake by.
- For example, if you stake £500 at a leverage of 1:10 – your position is boosted to £5,000.
- If you reduced your leverage ratio to 1:5 – then your £500 stake is boosted to £2,500.
In terms of margin, this is the percentage that you are required to put up to access your stated stake.
- For example, applying leverage of 1:10 on a £500 stake gives us trading capital of £5,000. This means that of the £5,000 position, you are only required to put up 10%. As such, leverage of 1:10 equates to a margin requirement of 10%.
- In another example, we noted that a £500 stake at leverage of 1:5 boosts our stake to £2,500. This means that on a £2,500 position, we are only required to put up 20%. Therefore, leverage of 1:5 amounts to a margin requirement of 20%.
As you can see from the above examples, leverage and margin limits when trading Bitcoin are correlated. For instance, if your chosen brokerage site states that the minimum margin requirement is 5% – this means that you can trade with leverage of up to 1:20.
Making Money From Bitcoin Margin Trading
If you have never engaged with Bitcoin margin trading in the UK – you might still be somewhat confused about how profits and losses work. Starting with the former, let’s run through a quick example of how a leveraged trade can boost the returns of a successful Bitcoin position.
- Let’s say that you want to go short on BTC/USD
- BTC/USD is currently priced at $50,000
- You decide to stake £2,000 at a leverage of 1:20
- A few hours later, BTC/USD has fallen to $45,000 – which is a price reduction of 10%
- You went short on this position – so you are 10% in profit
- On a stake of £2,000 – you would have made gains of £200 without trading on margin
- However, you applied leverage of 1:20 – so your £200 profit is amplified to £4,000
As you can see from the above, high leverage limits can really take your Bitcoin trading gains to the very next level. However, as we discuss in the next section, Bitcoin margin trading can also result in amplified losses.
Risks of Bitcoin Margin Trading UK
It is important to have a firm grasp of the risks involved when trading Bitcoin on margin. The overarching risk that you need to be made aware of is having your position liquidated when the market moves against you by a certain amount.
You also need to think about the risk of having your leveraged trade result in a negative balance.
Liquidation
In a nutshell, if you trade on margin and your position goes down by a certain amount – your broker will be forced to close it. Although the specific figure can vary from broker to broker, the general rule of thumb is that when your losses are equal to the percentage of margin being used, the trade will be liquidated.
For example:
- Let’s suppose that you stake £500 on BTC/USD at a leverage of 1:20
- This means that you are boosting your position to £10,000. As such, your margin requirement here is 5% (£10,000/£500)
- You decide to go long on this trade – meaning you think that BTC/USD will increase in value
- The trade goes against you and thus – Bitcoin has dropped in value by 5%
- As this price reduction amounts to your margin figure of 5% – the broker will liquidate your position
Once the broker liquidates your trade, this means that you will lose your entire margin. In the example above, this means that you would have lost your £500 stake.
Before you get to the point of liquidation, your Bitcoin trading broker will likely send you a ‘margin call’. This won’t be a telephone call – rather, you will likely receive an email or pop-up notification. Either way, when you are getting close to being liquidated, the margin call will give you the opportunity to add more funds to the position.
While this will give you more breathing space by increasing the liquidation point, by adding more capital to the trade you are further increasing your exposure to risk. This is why it is crucial to ensure each and every Bitcoin margin trading position is placed alongside a stop-loss order.
Negative Balance
The other risk that needs to be considered when engaging in Bitcoin margin trading in the UK is that of negative balance. This means that your leveraged position has gone against you and thus – you now potentially owe the broker to cover the deficit. In most cases, this won’t be the case with brokers in the UK – as you will likely find that your margin position is liquidated long before you approach a negative balance.
In fact, when choosing eToro to trade Bitcoin on margin, you will benefit from the same negative balance protection that is offered to retail client accounts. This means that should your balance have dropped below zero – eToro will cover the loss. This isn’t the case with all Bitcoin brokers though – so it’s crucial that you check this before opening an account with the provider in question.
Bitcoin Margin Trading UK: Limits and Fees
When it comes to the limits and fees associated with Bitcoin margin trading in the UK – this is typically determined by your chosen broker. That is to say – unlike retail client accounts, the are no specific guidelines on limits when it comes to professional clients.
With that said, our research found that most reputable brokers in the UK that are authorized and regulated by the FCA will cap Bitcoin and cryptocurrency leverage to 1:20. This is much smaller in comparison to other asset classes – with the likes of forex often attracting limits of up to 1:500.
Overnight Financing Fees
When you trade Bitcoin on margin, you are accessing leveraged financial products. This means that you are accessing a higher level of capital that you have staked from your account. In turn, this means that you will need to pay interest on the amount of capital being borrowed from the broker. This is known as ‘overnight financing’ in the trading arena. Some brokers also refer to this as ‘swap fees’ – albeit, the two terms are used interchangeably.
Nevertheless, the overnight financing fee will need to be paid for each day that you keep your leveraged Bitcoin trade open. Brokers normally set a specific time of the day – such as 9 pm. This means that should your position still be open after 9 pm, the overnight financing fee will kick in. You should also expect to pay a higher rate when positions are kept open across the weekend.
In terms of how much you should expect to pay, this will depend on factors like:
- Your chosen broker
- The amount of leveraged being applied
- The size of your stake
- The asset being traded
What we like about eToro is that the broker displays your daily overnight financing fee in dollars and cents. This gives you a full understanding of how much you will need to pay for each day that the leveraged positions remain active. Most brokers, however, typically only give you the percentage rate that needs to be paid – which can be difficult to comprehend.
Bitcoin Margin Trading UK – Get Started in Under 5 Minutes
If you qualify as a professional client in the UK and wish to start trading Bitcoin on margin right now – follow the detailed walkthrough below. In doing so, you will get your Bitcoin margin trading journey underway in less than five minutes!
Step 1: Open a Standard Broker Account
We noted in our broker reviews earlier that eToro is the best platform to trade Bitcoin on margin in the UK. As such, this walkthrough will show you how to complete the process with this top-rated broker in a seamless manner. So, the first step is to open a standard account with eToro – which should take you no more than a couple of minutes.
This simply requires some basic personal information, contact details, and a chosen username and password. Next, you will be asked to enter some information about your prior trading experience. After confirming your UK mobile number – you can move on to the next step.
Cryptoassets are highly volatile unregulated investment products. 67% of retail investor accounts lose money when trading CFDs with this provider.
Step 2: Request a Professional Client Account
Once you have opened a standard account with eToro, you can then request to be upgraded to a professional client. You can do this from within your account dashboard and by following the on-screen prompts.
In particular, you will be asked to submit some documents that prove you fall within the FCA guidelines of what constitutes a professional trader in the UK. You can review our earlier section to assess which metrics need to be met.
Step 3: Deposit Funds
You will receive an email from eToro when you have been upgraded to a professional client account. When you have, you can then head back to the eToro website to make a deposit. eToro supports bank transfers, debit/credit cards, and e-wallets like Paypal.
Step 4: Choose Bitcoin Market
With a fully-funded professional account at your disposal – you can now choose the Bitcoin market that you wish to trade on margin. If you know which pair you wish to trade, you can use the search box at the top of the page.
In our example above, we are looking to trade Bitcoin against British pounds – so we search for ‘BTCGBP’. If you want to see what leveraged Bitcoin pairs eToro supports, you can click on the ‘Trade Markets’ button followed by ‘Crypto’.
Step 5: Trade Bitcoin on Margin
Once you have selected the Bitcoin pair that you wish to trade on margin – you can then set up and order. You will need to choose from a buy or sell position – depending on whether you foresee rising or falling prices.
You can also specify your limit, stop-loss, and take-profit order prices. Next, enter your stake in the ‘Amount’ box and select your desired leverage limit.
Finally, click on the ‘Open Trade’ button to place your first Bitcoin trade on margin!
Bitcoin Margin Trading UK – Conclusion
Prior to January 2021, all UK investors had access to Bitcoin margin trading facilities. However, the FCA has since limited Bitcoin-related leverage to professional clients only. If you meet the requirements stipulated by the FCA – then you can trade Bitcoin on margin with ease.
Most reputable brokers in the FCA will offer professional traders leverage of up to 1:20 on Bitcoin – meaning that you can amplify your positions by a factor of 20x. Just make sure you consider the risks before proceeding.
Ultimately, we found that eToro is the best FCA-regulated broker in the UK to trade Bitcoin on margin – as the platform offers heaps of leveraged cryptocurrency markets at industry-leading fees.
eToro – Best Broker UK for Bitcoin Margin Trading
FAQ
Can I buy Bitcoin on margin in the UK?
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