- What is Margin Trading?
Margin Trading allows users to trade assets on borrowed funds in the crypto market. It amplifies trading results so that traders are able to reap larger profits on successful trades. Similarly, you are also at risk of losing your entire margin balance and all the open positions.
- What is Isolated Margin?
Each trading pair has an independent Isolated Margin Account. The position is independent for each trading pair. If adding margin is required, even if you have enough assets in other Isolated Margin Accounts or in the Cross Margin Account, the margin will not be added automatically, and you may have to replenish it manually. Margin level is calculated solely in each Isolated Margin Account based on the asset and debt in the isolated. Risk is isolated in each Isolated Margin Account. Once liquidation happens, it will not affect other isolated positions.
- What are the denomination token and trading tokens used for Isolated Margin?
Using BTC_USDT 10X as an example: USDT will represent the token used for denomination with BTC representing the tokens used for trading. Both the tokens can be used as margins for borrowing.
- Can you borrow both denomination and trading tokens for Isolated Margin?
In Isolated Margin mode, users cannot borrow both denomination and trading tokens at the same time. For example: If a user borrows a denomination token for going long, the user can only borrow the trading tokens once the interest fee and outstanding denomination tokens have been paid and returned.
- What is the maximum borrowable limit for Isolated Margin?
For each account in Isolated Margin, users can transfer both denomination and trading tokens as collateral.
User’s maximum borrowable limit = Total tokens in the Isolated Margin account x (Multiplier - 1) - Total tokens borrowed; The maximum tokens borrowed cannot exceed the numbers shown on the corresponding information table on the Borrowing interface.
- 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.
- 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.
- 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.
- 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%
- What is Margin Liquidation, Liquidation Line and Margin Call?
When user’s risk rate reaches the liquidation line, the system will trigger the liquidation to automatically sell the user’s assets and return the borrowed tokens and interest;
Liquidation Alert Ratio:
When user’s risk ratio reaches the liquidation line, the system will send the user a notification via text message to remind the users that there is a liquidation risk;
Margin Call Ratio:
When users’ risk rate reaches the margin call line, the system will send the user a notification via text message to supply additional margin to avoid risk of liquidation.
- How is the liquidation price calculated?
The system will trigger liquidation when the user's risk rate reaches the liquidation line. Expected liquidation price = [(Borrowed denominated assets + Outstanding interest fee in denominated tokens) x Liquidation risk rate - Total denominated assets] ÷ Total trading assets - (Borrowed trading assets + Outstanding interest fee in trading assets) x Liquidation risk rate)
- What is Margin Shortage?
Margin Shortage occurs when a user’s account triggers liquidation and the remaining assets are not enough for repayment. Users are required to transfer assets promptly to not trigger our platform’s risk control. If risk control is triggered, users will be unable to withdraw assets, trade margin products and more.
- 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.
- 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.
- What are the terms on repayment?
Users can manually select to repay the loan assets partially or entirely. Interest will be repaid firstly, then the principal. The system will calculate interest based on the latest borrowed quantity in the next hour.
If the user does not return the borrowed assets for a long time, the increase in interest fee may cause the risk rate to reach the liquidation line, thereby triggering liquidation.