Introduction to margin trading

Published on 17. 6. 2022Updated on 1. 4. 20254 min read

Introduction

Margin trading allows users to borrow and trade crypto in both directions using the assets in their trading account as collateral. Users can trade with up to 10x leverage, which significantly amplifies your profit but also magnifies your loss. You can access margin trading in all account modes. Users in spot and futures, multi-currency margin, and portfolio margin account modes can choose to carry out margin trading in either isolated or cross margin mode.

How does margin trading work

Borrowing

Market loan

Users will be borrowing from the market loan pool when carrying out margin trading. Funds in this pool are from flexible Simple Earn product. The maximum amount you can borrow is determined by your current user level’s borrowing limit, the tiered position limit for the crypto, and the flexible Simple Earn pool limit, whichever is less.You can place orders to buy back the crypto borrowed and repay the market loan. For spot, multi-currency cross margin mode and portfolio margin cross mode, you can also transfer the borrowed crypto from your funding account back into your trading account to repay the market loan as well.

VIP loan

In addition to market loan, we offer VIP loans to users that meet the requirements. Users are able to convert their VIP loan into market loan under certain circumstances. For more details, including specific repayment mechanisms, refer to VIP loan.

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. 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. For more details, refer to Interest calculation.

Forced Repayment

There might be scenarios where user-based forced repayment or platform-based forced repayment is triggered and assets are sold to repay liabilities. For more details, refer to Forced repayment.

Margin position tier rules

The maximum borrowable amount, maximum leverage and maintenance margin requirement will be different for each tier. The higher the leverage, the lower the maximum borrowing amount. As such, if you have sufficient funds but still trade using a high leverage, the amount you can borrow may be less than what you could have borrowed had you selected a lower leverage to trade with. For more details, refer to Margin position tiers.

Risk Assessment

The higher the leverage and borrowed amount, the higher the probability of triggering a liquidation alert. If your margin level falls to 300%, you’ll receive a liquidation warning, alerting you of the liquidation risk. If your margin level falls to 100% or lower, partial or full liquidation will be triggered depending on the amount of liabilities and assets at that point in time. For more details, refer to Isolated margin mode, Spot and futures cross margin mode and Tiered maintenance margin ratio rules.

This document is provided for informational purposes only. It is not intended to provide any investment, tax, or legal advice, nor should it be considered an offer to purchase, sell, hold or offer any services relating to digital assets. Digital asset holdings, including stablecoins, involve a high degree of risk, can fluctuate greatly, and can even become worthless. Leveraged trading in digital assets magnifies both potential gains and potential losses and could result in the loss of your entire investment. Past performance is not indicative of future results. You should carefully consider whether trading or holding digital assets is suitable for you in light of your financial condition, particularly if considering the use of leverage. You are solely responsible for your trading strategies and decisions, and OKX is not responsible for any potential losses. Not all products and promotions are available in all regions. For more details, please refer to the OKX Terms of Service and Risk & Compliance Disclosure.