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 MXC Trading Platform is a derivative feature from spot trading. Users can use the feature to increase asset for trading to magnify profits.
The whole processes are:
Open margin account--Asset transfer--Borrow--Margin trading (long/short)--Repay loan & interest
The detail tutorials are below:
I. Open margin account
After entering the page, the supported margin pairs are shown in the right column (currently only isolated margin is available)
1. Click "Asset Transfer" on the trading page to open a dialog box, input and verify the token and transfer quantity as shown below (here take BTC as an example) :
2. Upon successful transfer of the principal balance to the Margin Account, users can start to borrow token by clicking the【Apply to borrow】button option on the Trading Panel, and then input the amount you want to borrow.
- Reduce the loan amount if the original input amount exceeds the maximum available loan amount.
- Margin loan interest rates fluctuate. Please refer to the margin loan interest rate on your account for actual rate.
3. Upon successful borrowing, users can visit [Assets > My Assets > Margin Account] to check the borrowing.
Users can also visit [Orders > Margin orders > Borrowing record] to check application time, interest rate and interest amount.
- Each token has a minimum and maximum loan amount. When the base principal is lower than the minimum loan amount, the available loan amount will reflect as 0. Under this circumstance, please top-up the principal balance from the Margin Account.
- Borrowed: Total Amount Borrowed To-Date (i.e. successfully applied)
- Available for borrow: Remaining Amount that Can Borrowed
III. Margin Trading (Buy long or Sell short)
Upon receipt of the borrowed token, user can proceed to trade on margin, which involves a Long or Short position. Details as follows:
[Buy Long]: If the expectation is that the token price will rise, transfer funds to the margin account, borrow token, purchase target token at a lower price, sell at a higher price, repay loan and loan interest and earn the price differential.
In the case of Buy Long, borrow USDT to purchase token at a low price and sell at a higher price to earn a profit. Take buy long EOS as an example:
1. At the【Margin】page, users can buy long EOS in Limit Order
2. When the price of EOS rise to the expected price, sell short EOS in Limit Order
If the expectation is that the token price will fall, transfer funds to the margin account, borrow token, sell target token at a higher price, buy at a lower price, repay loan and loan interest and earn the price differential.
In the case of Sell Short, borrow the target token (e.g. ETH) to sell token at a high price and purchase at a lower price to earn a profit.
1. Firstly, borrow a fixed quantity of the target token.
2. Upon successfully borrowing the token, sell short on the Margin tab at a high price.
3. Once the price falls to the target level, buy back the token in the Margin tab at a lower price and repay the loan and interest on loan.
Sell at a high price and buy back at a low price, repay the loan and interest on loan. The larger the market price difference, the greater the profit received.
Margin trading uses a fraction of assets to potentially earn a bigger profit. Whilst accurate prediction of future price movements can allow you to earn a higher profit, if the market moves in the wrong direction, the lost will be correspondingly bigger. As such, ordinary users should avoid taking on highly leveraged trading positions to avoid liquidation of assets.
IV. Repay Loan and Interest
1. Users can visit [Assets > My Assets > Margin Account] to repay loan and interest
2. Click ‘Repay’ button on the right side to access the Repay dialog box, input the quantity to repay, verify input amount and click ‘Apply to repay’ button. (If there is insufficient token quantity to repay the token and interest, it is necessary to top-up transfer into the ‘Margin Account’ the differential amount to successfully return the loan.)
- Interest Rate：Interest rate charged is computed as a percentage (%) of the token quantity amount. It is charged at 00:00 (UTC+8) on a daily basis. If the token was borrowed for less than 1 day, the interest amount computation will round it to 1 day.
- Users shall repay the token of what they have borrowed.
- For example, if you use 100 USDT to borrow 1 ETH (interest rate 0.08%), you will repay 1 ETH+ 0.0008ETH=1.0008ETH. If your ETH balance is less than 1.0008, you have to convert USDT to ETH, or deposit ETH to repay the loan and interest.
- It is important to repay token and interest on a timely basis to avoid incur unnecessary charges due to late payment.