What is leveraged margin trading?

Leveraged trading is to magnify the principal several times, make larger investments with small funds, and realize small profits and double profits. But at the same time, you must bear the risk of doubling the possible losses. Because the price of digital assets fluctuates greatly, please be sure to use it carefully after fully understanding the risks of leveraged trading.

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What are the risks of leveraged margin trading?

Leverage uses less capital to realize the possibility of obtaining greater returns. However, if the wrong trading direction is judged, the loss will also be magnified year-on-year. Therefore, ordinary traders try to avoid heavy trading with high leverage to prevent forced liquidation or even liquidation.

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Concepts related to leveraged trading:

Margin account:
Each margin trading pair corresponds to a loan account. For example, BTC/USDT corresponds to a BTC/USDT margin account, and the BTC and USDT in the spot account can be transferred to the BTC/USDT margin account.
Transferred assets:
Assets transferred from the spot account to the leveraged account through asset transfer.
Borrowed Assets:
Assets borrowed using transferred assets as margin
Available assets:
Assets that can be used to place orders in a leveraged account, including transferred assets and borrowed assets.
Freeze assets:
Assets in the margin account that cannot be used to place orders.

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How can I transfer funds to my margin account?

CoinEx users are temporarily unable to directly recharge to a margin account, and can transfer assets from the spot account to the margin account through asset transfer. When a user borrows currency, the part of the margin account whose risk rate is higher than the transfer risk rate (transfer risk rate of 3 times leverage = 150%, transfer risk rate of 5 times leverage = 125%) can be transferred to the spot account; When the user has no loan, all available funds in the margin account can be transferred out to the spot account.

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How can I borrow funds?

CoinEx users enter the page of margin trading or margin assets, click “Borrow” in the margin account, and then they can borrow coins. The calculation formula for the user’s maximum borrowing is: maximum borrowing = (total assets of the account – outstanding borrowed assets – outstanding Interest)*(Maximum Leverage – 1)- Outstanding Borrowed Assets

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How is the loan interest calculated?

  1. Interest calculation rules: Interest is calculated independently for a single loan order. Interest will be calculated for the first time when the loan is successful, and interest will be calculated once every hour. Remarks: interest will not be calculated repeatedly if the interest is not repaid. CoinEx provides users with better leverage rates, which may fluctuate due to market fluctuations and other factors.
  2. Token repayment rules: Priority is given to repaying the earliest loan order. Prioritize the repayment of interest and then repayment of principal. After the principal and repayable interest of a single loan order are all paid off, the status of the single loan order will be changed to paid off, and then the order will no longer accrue interest.
  3. Borrowing period: 10 days tentatively, automatic renewal is enabled by default, and automatic repayment will be triggered if the borrowed currency is not repaid within the specified time.
  4. Automatic renewal: Renew according to the latest loan interest rate and loan period.
  5. If the automatic renewal of the loan order is not enabled, the loan expiration warning notification will be triggered 72 hours, 24 hours, 8 hours, and 1 hour before the order expires; if the automatic renewal is enabled, but the balance of the loan pool Insufficient loan renewal failure will trigger a renewal failure notification to remind the user to take the initiative to repay the currency. At the same time, the order expiration time will be automatically extended for 24 hours. After 24 hours, if the user does not take the initiative to repay the currency, the system will trigger the automatic renewal again. If the renewal still fails, the automatic repayment process will be triggered.
  6. If valuable assets are generated in the event of candy, fork, etc., the specific distribution and return rules are subject to the announcement at that time.

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How can I use leverage to magnify gains if I think the price will go up?

Taking BTC/USDT as an example, if the trading market supports up to 3 times leverage. When you judge that the price of Bitcoin will rise from 5,000 USDT to 6,000 USDT, you have a principal of 5,000 USDT, and you can borrow up to 10,000 USDT from the platform. Use 15000USDT to buy 3BTC at the price of 5000USDT, and sell it at 6000USDT, the profit is 3BTC*(6000-5000)=3000USDT. If you only use your own 5000USDT for cross-margin trading, you can only make a profit of 1000USDT. Use 3 times leverage to trade, and the income will be enlarged by 3 times.

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How can I use leverage to magnify gains if I think the price will go down?

Taking BTC/USDT as an example, if the trading market supports up to 3 times leverage. When you judge that the price of bitcoin will drop from 5000USDT to 4000USDT, you have a principal of 5000USDT, you can borrow up to 2BTC from the platform, sell 2 bitcoins at 5000USDT, buy them at 4000USDT, and make a profit of 2000USDT. If you only trade with your own assets, you can only buy low and sell high, and you cannot go short.

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How is Index Price calculated?

CoinEx adopts a uniquely designed leverage index price marking system to avoid forced liquidation caused by large fluctuations in the spot market and protect the rights and interests of users.

The price of the leveraged index selects a number of mainstream exchanges as the index weight components, and an exception handling logic is designed to ensure that when the price of a single exchange deviates significantly, the index fluctuation is within the normal range.

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How to reduce leverage risk rate?

  • Reasonable use of leverage multiples to control positions.
  • Timely stop profit and stop loss, and spontaneously close positions.
  • Add margin in time to ensure that the ratio of total assets/leverage limit is greater than 110%.

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How are Risk Rate, Transfer Risk Rate, Risk Alert Rate, Forced Liquidation Rate, and Forced Liquidation Price calculated?

1. Risk rate

The risk rate is an evaluation indicator for the forced liquidation risk of a leveraged account. Risk rate = [(total assets of pricing currency – outstanding interest of pricing currency) / index price + (total assets of trading currency – outstanding interest of trading currency)] /(Pricing Currency Borrowing Assets/Index Price+Trading Currency Borrowing Assets)*100%

2. Transfer risk rate

2 times leverage transfer risk rate = 200%, 3 times leverage transfer risk rate = 150%, 4 times leverage transfer risk rate = 135%, 5 times leverage transfer risk rate = 125%, When the risk rate > transfer risk rate, the risk rate is evaluated as safe, and the excess assets in the account can be transferred out through asset transfer.

3. Early warning risk rate

The early warning risk rate of different leveraged trading pairs will be determined according to market depth, trading activity and other factors. When the risk rate ≤ the early warning risk rate, the risk rate is evaluated as more dangerous, and the system will send an internal notice to the user, text messages, emails and other risk reminders.

4. Liquidation risk rate

The liquidation risk rate of different leveraged trading pairs will be determined according to factors such as market depth, trading activity, and loan amount. When the risk rate ≤ the forced liquidation risk rate, the system will force liquidation and return the currency, and send text messages and emails to inform the user.

5. Calculation formula of forced liquidation price

Forced liquidation price = (price currency borrowed assets * forced liquidation risk rate + pricing currency outstanding interest – pricing currency total assets) / (trading currency total assets – transaction currency outstanding interest – transaction currency borrowed assets * liquidation risk rate)

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What is the risk reserve for leveraged trading?

CoinEx withdraws 30% of the platform’s loan interest income every day and injects it into the margin trading risk reserve for margin trading. The platform reserves the right to deal with the platform’s income in other ways in the future. If the margin trading risk reserve cannot be deducted from the liquidated position allocation, and the remaining undeducted portion of the liquidated position will be paid in advance by the system, and the liquidated position user will record the corresponding arrears (the withdrawal function is restricted, and normal transactions will not be affected), and the liquidated position user The system can automatically repay the arrears by actively transferring assets to the arrears’ leverage account; or you can wait for the leverage risk margin to be replenished. After the leverage risk margin is replenished, the user’s arrears will be deducted according to the time of the user’s arrears.

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How to realize mortgage loan through leveraged trading?

CoinEx users can use the leverage trading function to realize the operation of borrowing money with collateral or borrowing money with collateral. Trading pairs with different leverage multiples correspond to different mortgage rates. Trading pairs with 5 times leverage are supported, and the pledge rate is up to 80%. ETH/USDT trading pair, assuming that the ETH index price is 3000USDT, you can transfer 3000USDT to the margin account first, and borrow no more than 0.8ETH, then you can transfer all the borrowed ETH to the spot account, and the ETH in the spot account can be withdrawn.

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