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:
Open the CoinEx App, log in to your account, and tap [Spot] on the homepage. Then search the trading pair in the upper left corner, select a quote crypto, then click on [Margin] to see the crypto pairs that support margin trading.
2. Prepare for margin trading:
Click the transfer icon to transfer assets to the margin account.
Note: Funds are managed separately for different trading pairs. You must transfer assets to the corresponding pair before you can begin 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) Margin Short Position:
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 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 (App)
How to Sell Short in Margin Trading (App)
Margin Trading Information Inquiry Tutorial
1. Check margin orders
Method 1
Tap [Spot] > [Margin], scroll down to the bottom of the page, then click [Pending Order] or [Order History] to view margin 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
(1) Tap [More] > [Orders] on the CoinEx App homepage.
(2) Select [Spot Order], click the filter button in the upper right corner, select “Margin” and the trading direction to view margin orders.
2. Check spot asset history
(1) Go to [Assets], tap the details icon in the upper right corner, then select [Asset History].
(2) Click the filter button. Check the transaction history of your margin account.
Check margin trading statistics
Tap [Spot Trading], select the [...] icon in the upper right corner, then click on [Tx Statistics], and select the time period for your query (default is the past 30 days) to view the statistics.