What is Margin Trading?
Margin trading is a way of trading assets by using funds provided by third parties. Compared to regular trading accounts, margin trading accounts allow traders to get more funds and support their use of positions. Essentially, margin trading magnifies trading results and allows traders to earn more profits in profitable trades. This ability of expanding trading results makes margin trading particularly popular in low volatility markets, especially in the international foreign exchange market. Margin trading is also used in the stock, spot and cryptocurrencies markets.
Risk Rate and Liquidation
What is Risk Rate?
As margin trading magnifies your profits and earnings through the leverage , CoinBene will assess the risk of your margin account through the risk rate.
How is Risk Rate calculated?
Risk rate formula: risk rate = total asset / (total loaned amount + total accrued interest )
What is Liquidation?
When the risk rate of margin account is ≤110%, the system will perform a forced liquidation process, which will force the transaction to sell position assets of the margin account to repay the loan. Therefore, please pay attention to the account risk and avoid unnecessary losses caused by the liquidation.
When the risk rate is ＞125%, it is in a low-risk state, and the excess assets in account can be transferred out;
When the risk rate is ≤120%, the margin call will be triggered. The system will indicate the risk and advise users to increase the margin (which means transfer more mortgage funds) by sending users emails and text messages to avoid liquidation ;
When the risk rate is ≤110%, the forced liquidation process will be triggered, the system will inform the user through emails and text messages.
How to Margin trade?
4.Repay the Loan and Interest
Enter the margin trading page or the asset page, select the margin account, click ‘Transfer’ to transfer the assets ( based on the trade pair) to the margin account.
After transferred funds to margin account and selected the margin account on the margin trade page or the asset page, click loan coin to switch to leveraged mode.
Loaning limit: 0-4x the total token amount available in the trading pair of your margin account. You can trade with up to 5x of your funds.
Trading pair: In the trade pair that you loaned, such as BTC/USDT: you can loan BTC to short BTC; or loan USDT to buy BTC. The denominator is the base token, which is the token you sell; the numerator is the quote token, which is the token you buy.
3. Congratulations on your commencement of Margin trading, the amount of buying and selling asset will increase in this trade pair.
3.1 To long ETH: Borrow USDT to buy ETH. When the price of ETH rises, sell ETH and repay and interest in USDT, and the remaining amount will become your gain.
3.2 To short ETH: Borrow ETH and sell. When the price of ETH drops, buy back ETH to repay the principal and interest, the remaining amount will become your gain.
4.Repay the Loan and Interest
Interest is charged on an hourly basis and can be repaid at any time. (repayment must be made in the token borrowed)
Select an existing margin account, click "repay" on the right, fill in the repayment amount and confirm to repay the loan.
Interest rate calculation
The interest of CoinBene's margin account is calculated by hours and less than one hour is recorded as one hour.
If the daily interest rate is 0.02%, then the hourly interest rate is: 0.02%/24
Formula: interest = loan amount * (0.02% / 24) * loan hours
* Calculated from the time of loaning, it means recording as 1 hour immediately after loaned successfully, and it is recorded as 2 hours after one hour
A borrowed 1000 USDT at 13:20 and repaid at 14:15. The calculation of interest : 1000*(0.02%/24)*1=0.01666667 USDT