1. What's Margin Trading?
Margin trading is a kind of spot trading based on margin financing. Through making an initial investment as deposit in exchange for certain times of available credit, investors are able to amplify their profits.
2. How to start margin trading?
First enter into 'margin trading' page, before you start margin trading, you need to check Terms of Usage for Bit-Z Margin Trading, and in the following pages there will be user guides to show you how to start margin trading.
3. What is Margin Trading for? How to profit from a falling/raising market?
Margin trading can be used to buying long or selling short of trading pair:
a. Buying Long: For example, if trading pair A/B supports margin, and you want buy long of currency A, then you borrow the currency B to buy currency A, and wait until the trading pair price increase to your target price to sell all the currency you own in exchange for currency B. At this point, deducting currency B amount of what your borrow and the accrued interests, the net amount of B is the profit you get from this long trade;
b. Selling Short: for example, there is a trading pair A/B that supports margin, if you want to sell short of counter currency A, you will borrow in base currency A, and sell them all in exchange for B. When the price drops to the ideal price, you use B to buy A again. At this time, after repaying borrowing amount and accrued interest, the remaining A is the profit for selling short.
4. How many times of leverage does Bit-Z support?
Currently, Bit-Z provides users with 3 times of leverage. For example, the leveraged assets of BTC/USDT you own is 100USDT, and you can borrow 200USDT, then you have 300USDT available for trade.
5. How to calculate leverage interest?
Interest is calculated by applying the newest daily interest rate. In order to reduce user's interest burden, the calculation of interest is:
a. Interest is firstly calculated on the current hour, later interest will be calculated on every natural hour.
b. The hourly interest rate is 1/24 of the daily interest rate.
c. Interests are not compounded, only based on the amount borrowed.
d. Once paid off, interest will immediately cease to accrue.
6. How to transfer in/out leveraged assets?
Transfer in: for the moment, users cannot directly buy leveraged assets with money, you can transfer cryptocurrency assets to your leveraged assets.
Transfer out: you can transfer out all your leveraged assets on the premises that you have not borrowed any assets, otherwise you can only transfer the part of which the risk ration is bigger than 150%.
7. How to calculate risk ratio of margin?
Formula of risk ration (debt asset ratio):
Risk Ratio = (Total Assets of Base Currency / Mark Price + Total Assets of Counter Currency) / (Outstanding Loan of Base Currency / Mark Price + Outstanding Loan of Counter Currency + Interests Payable of Base Currency / Mark Price + Interests Payable of Counter Currency)*100%
I. When risk ratio >150%, part of assets can be transferred out.
II. When risk ratio≤130%, risk grade is alarm, and system will automatically notify the user through various methods.
III. When risk ratio ≤110%, margin call of the trading pair will be triggered, and users will be forced to sell assets to meet the margin call.
8. What's margin call?
When margin call is triggered, system will automatically revoke all unfinished limit order and profit-taking order or stop order. And based on the principle of repaying the loan in the currency of what you borrow, you will actively repay all the trading pair of the loan and accrued interest. If after paying off the loan of certain currency, you still have surplus of that currency, while you have loan of another currency outstanding, system will exchange the surplus with currency in debt in form of market order to pay off the loan. Once all the debts are paid down, the platform will charge 10% of the remaining assets as commission.
Maintenance Margin: the margin call threshold estimated by system. When the price of trading pair falls (buy long) or rises (sell short) to the price, margin call will be triggered.
Formula of Maintenance Margin:
Maintenance Margin = (Total Assets of Base Currency - Outstanding Loan of Base Currency * Risk Ratio- Interests Payable of Base Currency * Risk Ratio) / (Outstanding Loan of Counter Currency * Risk Ratio + Interests Payable of Counter Currency * Risk Ratio - Total Assets of Trading Currency)* 100%
9. What's mark price?
a. Mark Price is the weighted average price of the major trading platforms in the world. Mark price is used to calculate risk ratio, effectively preventing undue influence caused by transaction price of single platform from affecting user's risk rate and margin call price in extreme market.
b. Sample interval of mark price: every 2 seconds, Bit-Z obtainS the newest price from major trading platform through API.
c. Abnormal evet handling of mark price: If we fail to obtain the newest transaction price of certain exchange, that exchange will be excluded from calculation of mark price this time.
10. No compulsory interest charge
During the loan period, out platform only calculate the interest and will not compulsorily deduct interest from your account.
reference of rules of margin trading: