What is Margin Trading and its risks?
Margin trading refers to borrowing assets to amplify your principal amount, allowing for larger investments with a smaller amount of capital. This strategy aims to achieve high returns by investing a small amount.
However, due to the significant price volatility of digital assets, incorrect predictions about market direction can lead to proportionally larger losses.
Therefore, it is essential for regular traders to fully understand the risks associated with margin trading and exercise caution when using it. To avoid margin calls, forced liquidation, or even a total loss of funds, traders are advised to use leverage prudently and steer clear of high-leverage or heavily margined trades.
🔗 Explore more: Margin Trading Risk Warning
How to trade on margin?
1. Find supported trading pairs:
Method 1:
Visit CoinEx’s website (https://www.coinex.com), navigate to the top menu bar, navigate to the top menu under [Markets], and select [Market Overview] > [Spot Market] > [Margin].
Method 2:
On the "Spot Trading" page, select any quote currency and click on [Margin].
2. Prepare for margin trading:
Click the transfer icon to transfer assets to the margin account.
Note: Funds are managed independently for different trading pairs. You must transfer assets to the corresponding pair before you can start trading.
3. Borrowing and trading:
Take BCH/USDT as an example. If BCH/USDT supports 5x leverage, and the current price of BCH is 500 USDT, and your available balance in the Spot Account is 1,000 USDT and 5 BCH.
(1) Buying long on margin:
If you anticipate a price increase, you can borrow assets to buy at a lower price and sell at a higher price to profit from the difference.
- Borrowing: Based on your available assets in BCH/USDT, you can borrow up to 4,000 USDT from the platform.
- Trading: After borrowing, you can invest a total of 5000 USDT (your own assets + borrowed assets) to buy 10 BCH at 500 USDT each.
- Repayment: When the price of BCH rises to 600 USDT, you can sell the 10 BCH for 6,000 USDT and repay the borrowed 4,000 USDT to the platform.
Your profit will be:
6000 USDT (from selling) - 4000 USDT (borrowed) - 1000 USDT (initial capital) = 1000 USDT
Note: For simplicity, this example ignores borrowing interest and trading fees. The calculation is for reference only.
(2) Selling short on margin:
If you anticipate a price decrease, you can borrow assets and sell them at a higher price to profit from the price difference.
- Borrowing: Based on your available BCH/USDT assets, you can borrow up to 20 BCH from the platform.
- Trading: After borrowing, you can sell 25 BCH (your own assets + borrowed assets) at 500 USDT each, obtaining 12500 USDT.
- Short covering & repayment: When the price of BCH drops to 300 USDT, you can buy back 20 BCH for 6000 USDT and return them to the platform.
Your profit will be:
12500 USDT (from selling) - 6000 USDT (for short covering) - 1000 USDT (initial capital) = 5500 USDT.
Note: For simplicity, this example ignores borrowing interest and trading fees. The calculation is for reference only.
🔗 Explore More on Margin Trading:
How to Buy Long in Margin Markets(Web)
How to Sell Short in Margin Market (Web)
How to check Margin Trading information?
1. Check margin orders
Method 1
(1) On the "Spot Trading" page, click on [Margin], then select the trading pair you wish to view from the list, such as CET/USDT.
(2) Scroll down to the bottom of the page and click on [Pending Orders] or [Order History] to view margin order orders.
Reminders: The system displays orders for the current market by default. To view order records for all markets, uncheck the "Show current market" option.
Method 2
On the "Spot Orders" page, click [Pending Orders] or [Orders history]. Select “Margin” under “Trading Type”. Then, select [Market], [Side], [Order Type], and [Time] for your query.
2. Check Spot Asset History
Click on [History] > [Margin]. You can filter by [Account], [Assets], [Operations], or [Time] to view the fund flow of your Margin account.
Check margin trading statistics
1. On the “Spot Trading” page, select the trading pair you want to query, switch to [Margin Trading], then scroll down to the bottom of the page and click [Tx Statistics];
Or go to the "Spot Orders” page, click on [Order History] or [Trade History]. Select “Margin” under “Trading Type”, then select the trading pair and click [Tx Statistics].
2. Select the time period for your query (default is the past 30 days) to view the statistics.