Margin trading is essentially trading with borrowed funds instead of your own. When you place a margin order, all of the money you are using is borrowed from other users suggesting their funds spil peer-to-peer loans. The funds te your margin account are used only spil collateral for thesis loans and to lodge debts to lenders.
If you are fresh to margin trading, there are a few terms and concepts you may not be accesible with. Let’s go overheen them by looking at the switches to the user interface.
With the addition of margin trading, you now have three separate accounts te which you can store your deposited funds: exchange, margin, and lending. Your exchange account holds the funds you use for regular trading on the Exchange tabulator. Your margin account holds collateral used to secure loans used te margin trading. Your lending account holds funds you can loan to other users and earn rente on.
When you deposit funds, they very first go to your exchange account. Te order to margin trade, you will need to transfer some funds to your margin account at the Transfer Balances pagina. You may fund your margin account with any currency for which margin trading is enabled.
When you borrow funds and make a trade, a position will open. If you buy, you are opening what is called a long position. If you sell, you are opening a brief position. Note that spil you proceed to trade, your position may switch, for example, if you open a brief by selling 300 XMR, but then buy 600 XMR, your brief will become a long. When you close your position, your loans are lodged automatically. If you close your position at a profit, the profit will be credited to your margin account, if you close at a loss, the amounts needed to lodge your loans will be deducted from your margin account.
When you open a position, you will see something like this underneath the chart:
- Position: Long or brief.
- Amount: The netwerken amount of the market’s currency you have bought or sold. If your position is brief, this value will be negative.
- Pulvínulo Price: The approximate price at which you would need to close your position te order to pauze even.
- Est. Liquidation Price: The estimated highest bid (if your position is long) or lowest ask (if it is brief) at which a compelled liquidation will occur. Please note that this is only an estimate and has no bearing on when a coerced liquidation will actually occur. The positivo price at which a coerced liquidation will occur cannot be predicted with accomplish accuracy, spil it depends, among other things, on the size and number of your open positions and orders, the current value of your collateral, and current market and order book conditions. See Margin Account to learn more about what determines the timing of a compelled liquidation.
- Unrealized P/L: Estimated profit or loss you would incur if your position were closed. Includes lending fees already paid.
- Unrealized Lending Fees: The estimated value of outstanding fees on currently-open loans.
- Act: Click “Close” to close your position with a market order.
At the top of the margin trading pagina, you will see a summary of your margin account. If you don’t see it, click to expand the section.
- Total Margin Value: The total BTC value of all the currencies te your margin account. It is determined by the amount of BTC ter your margin account plus whichever is less for each of the other balances te your margin account: the amount of BTC they can be sold for on the current order book, or the amount they could be sold for at the 12-hour media trading price te their respective markets. It is significant to reminisce that the value of your margin account can switch quickly spil market conditions switch.
- Unrealized P/L: The approximate total profit or loss you would incur if all of your open positions were closed instantaneously with market orders, less unrealized lending fees.
- Unrealized Lending Fees: The estimated total value of the rente you presently owe on your active loans.
- Netwerk Value: The sum of your Total Margin Value, Unrealized P/L, and Unrealized Lending Fees. It represents the current total worth of your collateral.
- Total Borrowed Value: The total BTC value of your open loans. It is determined by the amount of BTC you are presently borrowing plus the amount of BTC that would be needed to buy on the current order books the total of all other currencies your are presently borrowing. It is significant to recall that this value can switch quickly spil market conditions switch.
- Initial Margin: The percentage your Netwerken Value is of the total value you can borrow. For example, if you want to borrow Trio BTC and your Initial Margin is 40%, you need to have at least 40% of Three BTC &mdash, or 1.Two BTC &mdash, worth of funds te your margin account, less unrealized losses and lending fees.
- Maintenance Margin: The percentage of your Total Borrowed Value that your Netwerk Value vereiste be te order to avoid a coerced liquidation.
- Current Margin: The percentage of your Total Borrowed Value that your Netwerken Value presently is (te other words, Televisiekanaal Value overheen Total Borrowed Value). Current Margin is a critical value, because if it dips below your Maintenance Margin, your account will fall under a coerced liquidation. For example, suppose you have 1.Five BTC ter your margin account, and your Maintenance Margin is 20%. Borrowing Three BTC, you open a long position te the XMR market. Now, te order to avoid a compelled liquidation, the Nipt Value of your margin account voorwaarde remain above 20% of the Three BTC you just borrowed, or 0.6 BTC. If the price of XMR starts declining, the amount of BTC you can get by selling the XMR you just purchased diminishes, and you begin to incur a loss. This is reflected te your P/L and Netwerken Value. If the amount of this loss, together with the lending fees you owe, reaches 0.9 BTC, the nipt value of your margin account will be 0.6 BTC (1.Five BTC minus 0.9 BTC te unrealized losses) and a compelled liquidation will trigger.
What Is a Coerced Liquidation?
A compelled liquidation is when all or part of your positions are closed automatically to prevent further loss and ensure you do not default on your loans. Coerced liquidations are executed using one or more market orders, spil such, order book liquidity at the time of thesis orders will affect the extent of the losses you incur from the liquidation. Compelled liquidations occur when your Current Margin dips below your Maintenance Margin. It is strongly advised that you check the markets and your open positions regularly, mitigating your risk spil necessary by reducing the size of your positions or transferring extra collateral into your margin account. Markets can switch very quickly, and no ensure can be made that you will receive a Margin Call warning te time for you to prevent a compelled liquidation.
How Do I Margin Trade?
Merienda you have transferred funds to your margin account, all you need to do to margin trade is place buy and sell orders. Borrowing is all treated automatically. There are a few things you may need to know, tho’, so let’s go overheen placing an order.
Two things are different compared to the buy opbergruimte on the Exchange pagina: Tradable movimiento and the Loan Rate field. Your tradable recuento is the amount of funds presently available to you for trading. Its value depends on your margin account balances, market conditions, and your open positions. The Loan Rate field permits you to specify the maximum daily rente rate you are willing to pay should your order open any fresh loans. Loans are always taken at the best available rate, so there is no harm te setting a value higher than the lowest rate suggested. If no one is suggesting loans at or below the rate you specify, a trigger order will be placed instead of your margin order. When loans become available at your rate, the trigger order will grab it and place your margin order.
It is significant to recall that albeit you can specify your maximum loan rate when you place an order, you may end up with a higher rate if you keep an order or position open for more than two days. This is because your loans may expire after that amount of time and be transferred to fresh lenders at the best available rate.
Te Margin Trading, trigger orders and zekering limit orders may end up triggering at an amount less than the amount you specify. This is because your tradable recuento varies continually with market and order book conditions and the status and number of your open orders and positions.
Merienda you have packed ter all the fields, click Margin Buy (or Margin Sell). Recall, even if your order does not pack instantly, you still incur rente fees on any loans used to place your order.
How Do I Opoffering Loans and Earn Rente?
If you choose to earn rente on your funds instead of trading with them, you can lend them to other users. Click on the Lending tabulator at the top of the pagina, then select the coin you wish to suggest ter the My Balances opbergruimte on the right. You will need to transfer funds to your lending account to opoffering them, which you can do from the “Quick Transfer” verbinding te the suggest opbergruimte.