Introduction to margin trading

Margin trading

Margin trading involves using your principal to borrow crypto, allowing you to trade in both directions with leveraged funds. You can then profit from rising or falling crypto prices by opening a long or short position, respectively. The maximum leverage is 10 times your principal, meaning you can significantly amplify your profit but also magnify your loss. As such, use caution when margin trading.You can access margin trading in spot and futures, multi-currency margin, and portfolio margin account modes, but not in margin-free mode. Additionally, both isolated margin mode and cross margin mode support margin trading. Your positions are isolated in isolated margin mode to reduce risks, and margin is shared across positions in cross margin mode to improve your use of funds. For more details, refer to Isolated margin mode and Spot and futures cross margin mode.

How to margin trade and control risks

You can start margin trading on the Margin page.

Trading

On the Margin page, select your desired leverage, order price, and order amount to buy (go long) or sell (go short) crypto. The leverage you select affects your maximum borrowing amount. Provided you have sufficient margin and haven’t reached the limit, the maximum borrowing amount equals your margin balance multiplied by your leverage.For instance, assume the last price of ETH is 1,000 USDT and you have 1 ETH in your account. If you’re optimistic about the market and wish to buy more ETH (go long), you can use your 1 ETH as margin to open a position with 5x leverage. This will allow you to borrow 5,000 USDT to buy 5 ETH. Your position size will be 6 ETH (including the 1 ETH margin that’s not counted in the trade), and your liability will be 5,000 USDT.Assume the price of ETH rises to 2,000 USDT and you sell 2 ETH. 4,000 USDT of liability will be automatically paid, your position size will be 4 ETH, and your liability will be 1,000 USDT. Your position will then be automatically closed once the remaining liability is fully paid.

Risk Control

The maximum borrowing amount and maintenance margin requirement (MMR) are based on your leverage:

The higher the leverage and borrowed amount, the higher the probability of triggering a liquidation alert. If your margin level drops below 300%, you’ll receive a partial liquidation warning, alerting you of the liquidation risk.If your margin level drops below 100%, liquidation will be triggered, and orders in the opposite direction to your position will be canceled. Additionally, some or all your isolated margin positions will be taken over by the liquidation engine, which will follow certain rules to cover your liabilities using the assets in those positions, until your margin level exceeds 100%.

Interest

Liabilities for positions in cross margin and isolated margin modes are calculated and deducted separately, with interest paid first. Interest is accumulated and recorded on the hour, and deducted every hour from 12:00 am UTC. It takes about 10 minutes to record accrued interest, and liabilities incurred during this period are also recorded.For example, if you borrow crypto at 10:55 pm UTC, interest isn’t recorded. At 11:00 pm UTC, interest is calculated and deducted. However, if you repay the liability at 10:57 pm UTC, no interest is generated.

Margin position tier rules

Based on market liquidity, OKX position tier rules set variable position limits for different leverage and require different margin levels.High leverage can lead to the liquidation engine taking over all of your MMR before your liability is paid, potentially leading to a clawback. Therefore, OKX limits the maximum borrowing amount when you use high leverage. Put differently, the higher the leverage, the lower the maximum borrowing amount. As such, if you have sufficient funds and choose high leverage, the amount you can trade may be less than your available funds. Conversely, you can place a larger order if you lower the leverage accordingly.