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eToro Negative Balance Protection -What is it?

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How does negative balance protection work

eToro Negative Balance Protection -What is it?

In this guide, we explain how negative balance protection works. We go into greater detail about the trading feature and what kind of benefits it provides for crypto traders. The article starts with an explanation of what is negative balance protection (NBP). We continue with the risks involved if NBP is not part of the trading package. We end with platforms that offer the service and how crypto traders can take advantage of it.

What is Negative Balance Protection?

The definition of negative balance protection is quite simple. You can trade assets to the amount available in your balance. If necessary, the website’s AI would close your position at the point when your balance reaches zero.

Example:  

1. A trader opened up a $2,000 worth of long (buy) position with 5x leverage for bitcoin at the price of $10,000 per coin. The leverage rate means he borrowed an additional $8,00 worth of assets to match 1 BTC.

2. After some time, market trends pushed the price down by 20% towards $8,000 per coin. The decline swallowed up the trader’s capital, leaving only the leverage amount within the order.

3. As a result of the decline, a negative balance protection function would kick in, liquidating the position. With the position closed, NBP ensured that losses will not happen in case of BTC’s further price decline.

If NBP is nonexistent, the position might close at the point where the trader would have a negative balance. Then, the investor would need to deposit money/coins to cover these losses and even more to have funds for trading.

Pros and Cons of Negative Balance Protection

Pros:

– NBP prevents further losses and negative balance

As mentioned in our example above, the negative protection balance function prevents traders to lose more than what they have. It factors in substantial market changes that can really cripple traders. A negative balance is possible during both bear and bull market movements. Those that short their orders during sudden bull runs lose as much as traders that long during bear runs.

– NBP assist with panic trading period

Additionally, the psychological factor is important as well. Without a foolproof limitation on trades, beginners would be under huge pressure while creating orders. The ability to lose much more than what you have in your balance can be a dangerous situation. The negative protection balance feature allows them to freely test out their strategies with a small amount of funds.

Cons

NBP would close even profitable orders

Whereas crypto trading starters might find benefits in NBP, experienced players might not like the feature. Many pinpoint that NBP can limit their trades by forcing liquidation during high volatility times. 2018’s bear market is proof of that, with many traders losing a lot more than what they have.

The snapshot below shows just how volatile Bitcoin can be at times, surging and rising at alarming speed and level. Thus, it is possible that NBP will close all of your positions even if few are quite profitable.

How does negative balance protection work?

Example: If the trader has a profitable short position with bitcoin but incurs losses with Ethereum and Ripple, all three positions would close. NBP might close out all your positions if your cumulative P&L is negative.

Plus500 Negative Balance Protection

Plus500 negative balance protection has a function called “Margin Call” that automatically closes positions that near the balance depletion. The function runs in the background, meaning that traders do not need to activate negative balance protection themselves. However, it is also important to mention that users cannot switch it off either. Platform stresses the importance of adequate analysis, as traders are responsible for their portfolio management. The function can close single or all positions, depending on the cumulative P&L results.

AvaTrade Negative Balance Protection

AvaTrade negative balance protection offers a bit more flexible than Plus500, as it tries to offer lenient trading programs for its users. Namely, the platform employs AIs that control liquidation orders as to not allow for negative balances to occur. In rare events that such a situation happens, the platform would fund the account with its own funds. It is a pretty nice feature for beginners that have just entered the crypto market.

eToro Negative Balance Protection

eToro negative balance protection employs a similar system to Plus500’s, taking into account all of your open positions. If your overall trading orders reach balance bankruptcy, your positions are liquidated. NBP service does it automatically, thus limiting losses that beginners might incur during their activities.

Conclusion – Negative Balance Protection

Through this short guide, we answered the question of how does negative balance protection works. Plus500, AvaTrade, and eToro all employ the service, limiting losses to funds held in balance. Although carrying several positives, traders are still expected to take care of their own positions. Risks are ever-present in the crypto market due to high price fluctuations.

If you’re interested in more Crypto Trading Educational articles, please read How to Pay Tax on Crypto Trading and Which is the best free crypto trading education for beginners.

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Source: https://www.cryptocointrade.com/crypto-trading-blog/etoro-negative-balance-protection/

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Bitcoin Dominance at 2-Month High: Disaster for Altcoins

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August was a bullish month for altcoin traders as they ranked in profits, forcing Bitcoin dominance to drop below 60% for the first time since the start of the year. However, the altcoin euphoria was shortlived as September brought along the bears.

The end of Q3 wasn’t great for Bitcoin traders, but that was expected as September is usually not a profitable month for Bitcoin. In fact, data shows that Bitcoin has lost more in September than in any other month.

As expected, the Bitcoin effect was seen across boards in the market. Altcoins suffered the most, shredding almost all of the profits accumulated in the previous month.

Bitcoin Eyes $12K

Bitcoin is pushing hard towards the $12k mark. It traded as high as $11,942 for the first time since mid-August.

Analysts believe the trend is the start of a new bull cycle for the leading cryptocurrency considering the coin shielded itself and recovered quickly from the recent negative news, including BitMEX’s charges and OKEx’s withdrawal saga.

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Although October has been impressive for Bitcoin, and the coin has since recovered from the bearish move in September, altcoins continue to live in the terrible nightmare from the past month.

October: Another Nightmare For Altcoins

Bitcoin dominance started rising in mid-September after it went as low as 55%. At the time of writing, the cryptocurrency maintains a 60.3% dominance of the entire crypto market while the altcoins struggle with 39.7%.

btc_dominance
Bitcoin Dominance. Source: CoinMarketCap

Even Ether (ETH), the second-largest cryptocurrency, was not spared. In August, the coin traded near the $500 mark, reaching $485 for the first time in two years. In the last two months, Ether lost over 20% of its value, and market dominance dropped from above 15% to 11%.

Now, ETH is exchanging hands at $369 with a 2% loss on the daily chart. However, speculation in the market is that the upcoming ETH 2.0 Phase 0 could provide the needed boost for Ether bulls.

Looking at the top 100, a handful of altcoins have shredded at least 15% of their value on today’s trading session. Some of the most significant losers include Uniswap (-17%), Crypto.com (-25%), Balancer (-19%). Meanwhile, Flexacoin saw a big boost with over 258.11% gains in the last 24 hours.

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Source: https://cryptopotato.com/bitcoin-dominance-at-2-month-high-disaster-for-altcoins/

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Crypto.com Integrates PayID Offering 5M Users an Easy and Unique Way to Send & Receive Crypto

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[PRESS RELEASE]

HONG KONG, October 19, 2020 — Crypto.com today announced PayID, a universal payment identity developed by the Open Payments Coalition, is now available on the Crypto.com App.

Crypto.com’s 5M+ users can register for a PayID from the Crypto.com app, consolidating complex wallet addresses and accounts into a simple ID that works across any payment network and currency. Users who register for their unique PayID will get an exclusive Crypto.com-branded, easy-to-read ID — such as “yourname$payid.crypto.com — that enables users to send/receive crypto payments from other compatible wallets with just a single ID, easing their ability to connect to 100M+ crypto users worldwide.

cryptocom_PR

PayID solves a key pain point in the crypto payments world, which consists of many closed and complex networks. Participants must manage multiple long and random wallet addresses, increasing the likelihood of erroneous transactions. PayID creates a free, open and common protocol that allows for interoperability between any payment network or currency.

Starting today, Crypto.com is offering early access for select customers to register their unique Crypto.com PayID. To be eligible:

  • Stake 10,000 CRO or more in Crypto.com Exchange; or
  • Stake 10,000 CRO or more in Crypto.com App

On 2 November 2020 all Crypto.com App users can register their own Crypto.com PayID within the Crypto.com App.

Once registered, users can send crypto from other compatible wallets to the Crypto.com App with just their PayID, instead of a full-length crypto address. At launch, supported cryptocurrencies include CRO, ETH, BTC, XRP and many more ERC20 tokens. Users can also send crypto to other compatible wallets using PayID hosted by other members in the Open Payments Coalition.

About Crypto.com

Crypto.com was founded in 2016 on a simple belief: it’s a basic human right for everyone to control their money, data and identity. Crypto.com serves over 5 million customers today, providing them with a powerful alternative to traditional financial services through the Crypto.com App, the Crypto.com Card, the Crypto.com Exchange and Crypto.com DeFi Wallet. Crypto.com is built on a solid foundation of security, privacy and compliance and is the first cryptocurrency company in the world to have ISO/IEC 27701:2019, CCSS Level 3, ISO27001:2013 and PCI:DSS 3.2.1, Level 1 compliance. Crypto.com is headquartered in Hong Kong with a 600+ strong team. Find out more by visiting https://crypto.com

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Source: https://cryptopotato.com/crypto-com-integrates-payid-offering-5m-users-an-easy-and-unique-way-to-send-receive-crypto/

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Crypto More Popular Than Gold Among Russian Investors: Report

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A survey among over 2,000 Russian investors has placed cryptocurrency next to gold in terms of popularity. Moreover, younger investors aged below 30 have displayed significant favoritism towards digital assets.

Crypto Ranks Above Gold Among Russian Investors

According to the study published by the World Gold Council, investors from the world’s largest country by landmass have allocated the most funds into generally accepted as safer instruments such as savings accounts, foreign currencies, real estate, and life insurance.

When asked what sorts of investment tools they had invested in the past 12 months, they placed cryptocurrencies as the fifth most popular asset with 17%. Interestingly, gold came next with 16%.

Investments Made In Russia 12 Months Back. Source: World Gold Council
Investments Made In Russia 12 Months Back. Source: World Gold Council

World Gold Council Director of Central Banks and Public Policy, Dr. Tatiana Fic, commented that gold had been a valuable part of Russia’s history. She explained that the development of the gold mining industry began in 1745 with the discovery of gold in the Urals. In the next 100 years, more than half of the global gold production came from Siberia.

However, she noted that the investment market has declined in interest lately. Dr. Fic reasoned that there’s an evident lack of education, resulting in people steering clear from the bullion. She also claimed that investors fear buying fake or counterfeit gold products.

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It’s worth noting that Russia seized purchasing gold earlier this year following half of decade of increased accumulation.

Younger Generations Keen To Experiment With Crypto

WGC’s report confirmed previous narratives that younger generations prefer allocating funds into riskier investment instruments such as digital assets.

“18-to-24-year-olds are much more willing to take risks to get exponential growth, rather than take a long-term view. For example, they are the least likely to have invested in a savings account but are the most likely to have invested in collectibles – and around two-thirds are considering investing in cryptocurrencies.” – the report reads.

The paper highlighted that the growing role of mobile apps linked to investment accounts have made it easier for tech-savvy youth to purchase their preferred assets. Cryptocurrencies lead the way “with nearly 80% being bought exclusively online.”

Although physical gold has been bought mostly offline, the report noted that online investments in gold-backed ETFs and vaulted gold have jumped in the past few years as well.

Investment Assets Purchases In Russia. Source: WorldGoldCouncil
Investment Assets Purchases In Russia. Source: WorldGoldCouncil
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Source: https://cryptopotato.com/crypto-more-popular-than-gold-among-russian-investors-report/

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