Rules in Margin Trading
I. Margin fee rates
1. Trading fee rate is consistent with Spot trading: 0.2% for both Maker and Taker.
2. Loan fee rate: The simple interest model is adopted for loans. Interest is calculated at the hourly rate (less than 1 hour will be calculated as 1 hour). The loan fee rate is based on the hourly rate displayed on the respective loan interface. The platform reserves the right to adjust the rate (including the rate and interest calculation method) from time to time in accordance with the market conditions and relevant legal policies, and notify you by updating this agreement / or announcement.
If you have not repaid the principal and interest before the new rate comes into effect, the interest will be calculated based on the old rate; if you made a loan after the new rate is effective, the new rate will be used to calculate the interest.
II. Margin Mode
MEXC Global currently supports Isolated Margin mode only. When a user transfer assets to a margin trading pair, an Isolated Margin account for the pair will be created for the user automatically. In Isolation Margin mode, users need to provide margin for the traded margin pair. The platform accepts both trading and denominated tokens as margins.
III. Description of Asset Indicators
(1) Total assets = the current total market value of all digital assets in the Isolated Margin account;
(2) Total liabilities = current total market value of "all unreturned digital assets + unreturned interest" in the Isolated Margin account
(3) Net assets = Total assets - Total liabilities
(4) Transferred assets: The assets transferred from other accounts into the Margin account.
(5) Loan assets: the asset loaned through the transferred assets as margin.
(6) Available assets: Assets that the user can use to place orders in the Isolated Margin account, including the part of "transfer + access-freeze".
(7) Frozen assets: Assets that users cannot use to place orders in the Isolated Margin account. Generally, it refers to the part that is being placed in the order.
IV. Loan Rules and Available Loan Description
After the user transferred the digital assets to the Isolated Margin pair, the user can make a loan based on his own assets. (Under normal circumstances, the cryptocurrency conversion rate for all pairs is 1, and the platform may adjust the conversion rate according to actual conditions and risk policies). Only the trading crypto or the denominated crypto is allowed to borrow.
(For example, if the user transfers 100 USDT to BTC / USDT margin pair, the USDT conversion rate is 0.8, and the leverage is 5 times. Then, the maximum loan amount for the user is 100 * 0.8 * (5-1) = 320 USDT. If the user has borrowed 100 USDT, then, the user can borrow the remained 220USDT, but not BTC. After the user returns all principal and interest, he can borrow BTC or USDT at this time, but once he has successfully borrowed one currency, he cannot borrow another)) After the user has successfully borrowed, The platform immediately starts interest calculated using the simple interest model. The relevant formula is as follows:
The maximum loan = min (asset x (leverage times-1)-loaned amount, max. loan amount of the platform, max. loan for the user)
Interest = principal × hourly interest rate × number of borrowing hours (1 hour is 60 minutes, less than 1 hour will be calculated as 1 hour).
V. How Users Return Principal and Interest
Every time a user completes a loan, a loan order will be generated correspondingly. Users can manually select the loan order that needs to be returned. When repaying, the interest is preferentially returned, and then the principal is repaid. After the principal and interest of the loan order are all paid off, the order status is converted to completed and the order is no longer billed.
VI. How Users Withdraw to a Spot Account
When a user applies for a loan, they can transfer the amount with a risk rate higher than 200% to a spot account; when the user does not have a loan, he can transfer all available funds to the spot account; the formula for the maximum withdrawal amount is as follows:
Maximum Withdrawable Amount = Net Assets-(n-1) (Loan + Unpaid Interest) / Conversion Rate; Remaining assets can be withdrew
For example: Suppose the BTC conversion rate is 1 in a BTC / USDT isolated margin account. If the user transfers 100 BTC and no loan occurs, he can transfer 100. If he borrows 5 BTC and the interest is 1 BTC, he can transfer 99-6 / 1 = 93BTC
VII. Explanation for risk rate, liquidation and wearing position
1.Explanation of risk rate
Risk ratio: an indicator used to evaluate the risk of funds in the margin account, the calculation formula is:
Risk ratio = total assets / total liabilities * 100% = (total assets in quoted crypto + total assets in trading crypto * latest trading price) / (borrowed assets in quoted crypto + assets borrowed in crypto * latest trading price + unreturned interest in quoted crypto + unreturned interest in trading crypto * latest trading price) * 100%
(1) When the risk rate ≤ the early warning line (currently 120%, if there are subsequent adjustments, the latest announcement shall prevail), there is a strong level of risk, and the system will send a email to inform the user to pay attention to the risk;
(2) When the risk rate ≤ the margin maintenance line (currently 115%, if there are subsequent adjustments, the latest announcement shall prevail), it is close to the execution of the flat, the system will send an email to inform the user to increase the margin in a timely manner;
(3) When the risk rate is ≤ liquidation line (currently 110%, if there are subsequent adjustments, the latest announcement shall prevail), the system will perform a forced liquidation and use the assets of the account to repay the principal and interest, and send an email to inform the user that the liquidation has been triggered;
2. Liquidation and Wearing Instructions
2.1 Liquidation price calculation formula:
Liquidation price = [(borrowed assets in quoted crypto + interest not returned in quoted crypto) * liquidation line-total assets in quoted crypto] / (total assets in transaction crypto-(borrowed assets in transaction crypto + interest not returned in trading crypto) * liquidation line)
2.2 Explanation of the liquidation process:
(1) Liquidation due to the latest price fluctuations
When the risk rate ≤ the liquidation line and consequently the latest transaction price of the pair ≤ the liquidation price, the system will limit the user's operation rights in the margin account (Restrictions is removed automatically after the liquidation is over). Then, the system sell user’s remaining asset at the price at the 100% liquidation line (the actual commission price may be dynamically adjusted according to the prevailing market fluctuations) to repay the principal and interest of user’s loan. If there is any remaining assets, the remaining assets of the user will be returned. At this time, the account risk rate is in a risk-free state.
(2) Liquidation due to accumulated interest
Even if the user does not trade after borrowing assets, the unpaid interest is still included in the risk rate. If the interest is not repaid for a long period of time, the risk rate of the user's isolated margin account may be reduced below the liquidation line (110%), resulting in forced liquidation of the account. Users are requested to periodically repay the interest or to keep sufficient available balance in the margin account to ensure that the risk rate is above the early warning line (120%).
2.3 Wearing position instruction
If all the assets under the isolated margin account are not enough to repay all the loans (“wearing position”) after liquidation,, the platform will freeze withdrawal service for the user and reserve the right to claim the debt.
VIII. Maximum loanable amount and minimum loanable amount in different cryptocurrencies
[Margin Trading Instructions]
Instructions for margin trading
Margin trading is a way for magnifying user's profit by introducing leverage in spot trading. However, it adds to user's risks as well. The margin trading rolled out by MEXC Global is a derivative feature from spot trading. Users can use the feature to increase asset for trading to magnify their profits.
I. What is margin trading?
Margin trading is a way for magnifying user's profit by introducing leverage in spot trading. However, it adds to user's risks as well. Because the price of digital assets fluctuates greatly, users must fully understand the risks of margin trading and use it with caution.
II. How to use margin trading to achieve greater profits under the prediction of price rise?
Take BTC / USDT as an example and suppose 3 times leverage supported. When you judge that the price of Bitcoin will rise from 10,000USDT to 20,000USDT, you have a principal of 10,000USDT and you can borrow up to 20,000USDT from the platform. Use 30000USDT to buy 3 BTC at 10000USDT and sell at 20,000USDT. Profit 3BTC * (20000-10000) = 30000USDT. If you only trade with your own 10,000 USDT, you can only make 10,000 USDT profit. The 3x leverage margin trading increases your earnings by 3x!
III. How to use margin trading to achieve greater profits under the prediction of price fall?
Take BTC / USDT as an example and suppose the platform supports 3 times leverage. When you judge that the price of Bitcoin will fall from 20,000USDT to 10,000USDT, you have a principal of 10,000 USDT (0.5BTC), you can borrow 1BTC from the platform, sell 1 bitcoin at 20,000USDT, buy at 10,000USDT, and earn 10,000 USDT. If you only use your own funds to trade, you can only buy low and sell high, you cannot short.
IV. How to calculate the loan rate?
It will be calculated from the moment of borrowing assets. The interest is calculated in hour. Less than one hour will be calculated as 1 hour. The interest is preferentially returned and the principal is repaid. After the principal and interest are all paid off, the order status is converted to completed and the order is no longer billed.
V. What are the risks of margin trading?
Margin trading enable users to realize greater returns with small fraction of fund. However, if the wrong direction is predicted, the losses will also increase. Therefore, ordinary traders shall try to avoid high-leverage and heavy positions to prevent liquidation.
VI. How to reduce the margin risk rate?
- Use proper leverage and control positions.
- Take profit and stop loss at proper time and close position before liquidation.
- Return the long-term accumulated interest in a timely manner and add margin to ensure that the ratio of total assets / leverage quota is greater than 120%.
1. What is Margin?
Users can apply for a loan on the platform to buy long/sell short of a trading pair to amplify trading results so that traders are able to reap larger profits on successful trades.
2. How to start Margin trading?
Users need to transfer assets to their Margin account as margin. After transferring the principal, users can start to apply for loan with the transferred principal as collateral and start Margin trading.
3. What is going long?
Using EOS/USDT as an example: By going long, users can borrow USDT to buy EOS at a low entry point. Once EOS price increases, users can then sell the EOS tokens and return the borrowed USDT and interest fee. The balance would be users’ profit from the trade.
4. What is going short?
Using EOS/USDT as an example: By going short, users can borrow EOS to sell, exchanging it to USDT at a high entry point. Once EOS price drops, users can then buy EOS tokens and return the borrowed EOS tokens and interest fee. The balance would be users’ profit from the trade.
5. Under what circumstances will the position be liquidated?
Liquidation may happen when the Isolated account’s risk rate is lower than 105%. Our system will close the trade to return the funds provided from the platform.
6. How is the risk rate calculated?
Risk rate = Total assets/Total liability = (Total denominated assets + Total trading assets x Latest trading price) ÷ (Borrowed denominated tokens + Borrowed trading assets x Latest trading price + Outstanding interest fee in denominated assets] + Outstanding interest fee in trading assets x Latest trading price) x 100%
7. When can a user transfer assets out of their Isolated Margin account?
Users that are borrowing assets can transfer part of the assets with a risk rate higher than 200% to the Spot account after deducting borrowed assets and interest fee. The risk rate of an Isolated Margin account should not be lower than 200% after the transfer.
Users with no ongoing loan can transfer all the available assets out with no restrictions.
8. How is the interest fee calculated on Margin Trading?
The interest fee will be calculated on an hourly basis. The system will start the fee calculation on the actual loan time of the user. Starting from the time of loan approval, every 60 minutes will be counted as 1 hour. Borrowed time less than 60 minutes will also be counted as 1 hour. Fees will be calculated once when loan is approved, and once every 1 hour thereafter.
9. What is leverage?
Please refer to each Margin interface for the leverage of each trading pair. If any adjustment of leverage occurs, an announcement will be made to inform our users.
10. How to check the account's risk rate, liquidation line, and liquidation price?
Risk rate, liquidation line and liquidation price indicators can be viewed in the lower right corner of the trading page.
11. How to check my Margin repayment records?
Users can view their loan and repayment history in the Margin interface.
12. How do I repay the loan?
Each time a user completes a loan, a corresponding order will be generated. Users can access the Repayment interface on:
- [Margin trading interface] - [Repayment] above the order system
- [Assets - Account] - [Margin account] - [Repayment]