Margin Trading Introductions
Margin trading is a spot trading model based on margin lending which helps investors to amplify their profits by paying a certain amount of principal as a margin in exchange for 3 times the available amount.
Margin trading is a form of currency trading with higher risks than ordinary currency trading. Please pay attention to control risks.
Margin trading can be used to do long and short two currencies in trading pair:
a. Long: For example, if a trading pair that supports margin is A/B, if you want to go long trading currency A, you will borrow the base currency B, and all buys will be replaced by A. When the price rises to the ideal price, you can sell it to replace B. At this time, after repaying borrowed B and generated interest, the remaining B is the profit for this long;
b. Short: For example, if a trading pair that supports margin is A/B, if you want to go short trading currency A, you will borrow the base currency A, and all buys will be replaced by B. When the price drops to the ideal price, you can sell it to replace A. At this time, after borrowing A and having generated interest, the remaining A is the profit for this short.
Introduction of terms and formulas
This flag indicates that this trading pair supports 3x、5x margin trading.
a. Total Assets: The total sum of tokens in your Margin Account for Spot, including available assets and assets on hold.
b. Borrowed Assets: Total Borrowed amount of tokens through Borrow-Repay.
c. Available Assets: The total amount of tokens available for trading including borrowed assets.
d. Frozen assets: The amount of tokens which is unavailable for playing orders and transferring out.
a. All indicators and data related to margin are based on trading pairs as a basic unit.
b. Mark Price: In order to prevent the user's risk rate and price on margin call in the extreme market from being overly affected by the last price of a single trading platform, BitZ adopts the weighted average price of the major trading platforms around the world as the only price index to determine the margin risk.
c. Maximum (Remaining) Available Leverage: Max quantity of token (remaining) available to borrow of a certain currency pair.
d. Maximum Available Leverage Formula:
I. Max Available Leverage(In Base Currency)=(Total Assets (In Base Currency)+Total Assets (In Trading Currency)*Mark Price-Outstanding Loan (In Base Currency)- Outstanding Loan(In Trading Currency)*Mark Price-Interests Payable (In Base Currency)- Interests Payable(In Trading Currency) )*(Max Leverage Multiplier - 1) -(Outstanding Loan (In Base Currency)+Outstanding Loan (In Trading Currency)*Mark Price)
II. Max Leverage(In Trading Currency)=Max Leverage(In Base Currency)/Mark Price
Risk ratio and Forced liquidation
a. Risk ratio: The important indicator for measuring the risk level of current margin trading pair.
I. When risk ratio >150%, some assets can be transferred.
II. When risk ratio≤130%, it indicates warning status, system will notify the user automatically through various methods.
III. When risk ratio ≤110%, forced liquidation will be triggered in this trading pair.
b. Risk Ratio Formula:
Risk Ratio = (Total Assets (In Base Currency) / Mark Price + Total Assets (In Trading Currency)) / (Outstanding Loan (In Base Currency) / Mark Price+Outstanding Loan (In Trading Currency) + Interests Payable (In Base Currency)/ Mark Price+ Interests Payable (In Base Currency))*100%
c. Forced liquidation: All the assets under the trading pair of the user are sold in part or in whole in the form of market orders to actively repay all the borrowings of the pair and the interest generated.
d. Price of Forced liquidation:estimated margin call threshold. Forced liquidation will be triggered when the price falls (long) or rises (short) to the price.
e. Formula ( Price of Forced liquidation)
Price of Forced liquidation = (Total Assets (In Base Currency) - Outstanding Loan(In Base Currency)*Risk Ratio- Interests Payable (In Base Currency) * Risk Ratio ) / (Outstanding Loan (In Trading Currency)*Risk Ratio+ Interests Payable (In Trading Currency)*Risk Ratio - Total Assets (In Trading Currency))* 100%
In order to reduce the user's interest burden, the calculation method of interest generated by loan is:
a. A full one-hour interest is calculated starting from the moment of the borrowing, then hourly interest is calculated for every natural hour after until the loan is paid off.
b. The hourly interest rate is 1/24 of the daily interest rate.
c. Interests are not compounded.
d. Once paid off, interest calculation will be stopped immediately.
Please refer to BitZ Margin Trading User Agreement