Bitcoin margin trading

Margin Trading Fees and Rates Margin crypto As a part of an effort to improve its existing margin trading offering, Poloniex launched a new trading engine in 2022. Interest on borrowed funds is charged daily, while the total margin value is denominated in BTC and calculated across all margin positions and currencies in a user’s margin account. In addition to spot margin order types, Poloniex enables futures traders to magnify their exposure to crypto markets with up to 100x leverage.

Leverage is expressed as a ratio, such as 1:5 (5x), 1:10 (10x), 1:20 (20x), or 1:100 (100x). It indicates how many times your starting deposited capital has been doubled. Assume you have $100 in your cryptocurrency exchange account wallet and wish to initiate a trade in Bitcoin (BTC) worth $10,000. Your $100 will have the same purchasing power as $10,000 with a 100x leverage, if your cryptocurrency exchange allows such leverage ratio. Understand leverage mechanics and platform margin requirements Once you’ve completed your margin trading, you are required to pay back the loan. You can choose to pay manually or set up auto repayments on Binance. Your loan will be automatically repaid using your collateral if your margin level decreases and a margin call is issued.

As traders graduate from spot trading to using leverage either through margin trading or futures contracts, they invariably ask themselves “Where or who is providing the leverage?” This article has been created to explain how leverage is granted when trading margin and futures crypto contracts. Supported Coins The amount of funds the exchange requires you to hold in the margin account is called the margin level. The exchange will indicate your margin level and how “healthy” it currently is; that is, how far you are from liquidation (losing your funds when you can’t pay the debt).

To avoid your position being liquidated, your account should always be above the maintenance margin, which is simply the minimum amount of capital you need in your account to ensure that your open trades remain active. Otherwise, the exchange will liquidate your position. When you receive an alert that your account has dropped to such an extent that it’s close to the maintenance margin, you can add more funds to your initial margin or sell part of your portfolio to ensure that your account doesn’t drop below the maintenance margin. What is 20x leverage in crypto? So, not only does a long position bleed as bitcoin's dollar-denominated price drops, but the collateral also loses value, compounding losses. That, in turn, results in a relatively quick margin shortfall and potential liquidation.