Leveraged trading: how to maximize the empowerment of spot trading?
Nov 27, 2024
OKX (formerly OKEx)
What can leveraged trading do?
When you are bullish on a currency, you can use the principal as a margin to leverage the borrowed currency. Both the principal and the borrowed currency "buy" the currency to open multiple positions. When the market rises to the ideal price and "sell" the currency, after paying off the borrowed currency and interest, the rest is the "multi-directional" income earned.
When you are bearish on a currency, you can use the principal as a margin blessing lever to "sell" the currency to open a short position, and then "buy" the currency when the market drops to an ideal price, pay off the borrowed currency and interest, and the rest is the "empty" income earned.
Characteristics of leveraged trading
1. Increase investment positions. Compared with spot trading, leveraged trading allows investors to increase their investment positions by borrowing funds. This means that investors can trade with a larger amount of funds than their own funds.
2. Enlarge returns and risks. Through leveraged trading, investors can enlarge their potential income, but at the same time, it will also increase the risk of trading. Because leveraged trading makes investors bear greater debt risks, market volatility may lead to greater losses.
3. Ask for a deposit. Leveraged trading usually requires investors to provide a certain percentage of margin as collateral for trading. This kind of margin can cover the losses caused by market fluctuations and ensure that investors abide by the prescribed risk management rules in transactions.
4. Interest payment by borrowing money. Borrowing money requires interest and deduction. Ouyi leveraged trading bears interest by the hour, that is, borrowing a few hours to pay interest for several hours. For specific rules, please refer to Introduction to Leveraged Interest Rules.
5. Return the money. Leveraged trading is carried out under the [spot and contract mode] of Ouyi. If borrowed money is generated, it can be automatically repaid with interest as long as the position is closed, whether it is full or warehouse by warehouse. In case of cross-currency margin mode, when debt is generated by borrowing currency, after closing the position, you can check the debt under the [Assets] column, and the interest is included in the debt. You need to buy currency under the currency transaction to pay off the debt.
How to open leveraged trading?
The currency lever under the unified account mode of Ouyi will form corresponding multi-position/short-position positions after successful opening, and you can check the gains or losses caused by market fluctuation in the positions. In addition, in the currency leveraged transaction under the unified account, the borrowed currency will be displayed in the position in the form of liabilities, and it cannot be transferred out. After paying off the liabilities, the liquidation will be completed.
Borrowing quantity and interest rate
The maximum loanable amount of the user is determined by the minimum of the loanable amount calculated by the leverage currency of the user's current account against the position, the stepped lending amount of the main account and the stepped margin limit. For details of the limit of ladder margin, please refer to: Introduction to the positions of leveraged currency borrowing positions.
According to the user's account level and the borrowed currency, the interest rate used in the interest collection of leveraged transactions is also different. For details, please refer to the Leveraged Interest Rate Table.
Interest bearing rule
In the whole warehouse and warehouse-by-warehouse mode, if liabilities are generated, interest will be generated; However, under the cross-currency full warehouse account, the unrealized gains and losses generated by the contract will enjoy an interest-free limit, and the liabilities caused by unrealized gains and losses within the interest-free limit will not bear interest.
Interest calculation and deduction: the liabilities incurred by users under full warehouse and warehouse by warehouse will be calculated and deducted respectively; The interest calculated by the user through interest-bearing liabilities is recorded on the hour, and the interest is deducted every hour based on 0. For example, when the user borrows money at 22:55, the user's interest is not recorded at this time. At 23:00, the user's interest is calculated through interest-bearing liabilities, and at 24:00, interest is deducted. If the user returns the borrowed money at 22:57, the user's borrowing behavior will not generate interest.
For information about borrowing data link and interest-free limit, please refer to Introduction to Leveraged Interest Rules.
matters need attention
1) In spot and contract mode, leveraged borrowing can only be carried out if there are assets in the trading account. If automatic borrowing is enabled in cross-currency margin mode, you can borrow money for currency-based or USDT-based margin trading without corresponding currency in the trading account.
2) Cross-currency leveraged trading, there will be no position display in the whole position, only liabilities and interest will be generated. After paying off, you can check the income under [Historical Position].
3) Leveraged trading has high risks, so please pay attention to risk control. When the margin ratio is less than = 300%, the system will send an early warning to the account, so you need to pay attention to the risk of lightening the position; When the margin ratio < = 100%, the lightening will be triggered.