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What is Margin Trading?

Margin trading with cryptocurrency allows users to borrow money against their current funds to trade cryptocurrency “on margin” on an exchange. In other words, users can leverage their existing cryptocurrency by borrowing funds to increase their buying power (generally paying interest on the amount borrowed, but not always)

Margin trading allows a trader to open a position with leverage. It lets you amplify your gains from market swings, allowing you to execute more complex, active trading strategies.

Getting started on DCXMargin with 3 simple steps:

Step 1: Login on CoinDCX

Step 2: Choose a trading pair you wish to trade

Step 3: Long/Short the pair

You can type and search the trading pair. Also you can mark your favorite coins making it easier for every next time you wish to trade on DCXmargin

What is a Long Position?

In this position, funds are bought by the trader and then sold at the Target Price. Traders open a long position in the hope that the price will go up in the future.

Eg. If a trader, trading in the XRP/BTC pair, longs 1000 XRP at 2x leverage. If the BTC equivalent of 1000 XRP is 0.09 BTC (considering XRP/BTC is at 0.00009000), then the exchange collects a collateral of 0.045 BTC only. Thus allowing 2x leverage. In this long position, exchange forwarded 0.045 BTC to the trader for buying 500 XRP, in addition to the 0.045 BTC held by the trader.

Long position

1. Go to the Trading page > Select Margin > Select the desired pair.
2. Set up a Margin Buy order (specify the quantity, leverage, price).
3. (optional) If you select a BO (Bracket Order) fill in other details like Target Price and SL (Stop Loss Price).
4. Place your order by clicking on Long.

Note that, When you want to close the position, hover over your trade, you’ll see the option to Exit position, edit or cancel. On selecting exit, your exit will be confirmed at the current market price. Alternately, when your Stop Loss price hits, your position will be closed. The borrowed funds will be repaid and the profit/ loss will be adjusted and settled in your account.

Example:

Long with 4x leverage

If a trader, trading in the XRP/BTC pair, longs 1000 XRP at 4x leverage. If the BTC equivalent of 1000 XRP is 0.09 BTC (considering XRP/BTC is at a price of 0.00009000), then the exchange collects a collateral of 0.0225 BTC only. Thus allowing 4x leverage.

In this long position, exchange forwarded 0.0675 BTC to the trader for buying 1000 XRP, in addition to the 0.0225 BTC held by the trader.

What is a Short Position?

In this position, funds (that the trader doesn’t own) are sold first and then bought at a later time. So when you open a short position, the exchange sells the crypto on your behalf and you owe the quantity of crypto involved in the trade, to the exchange. At a later point, you return this obligation by buying the coin at a lower price. Traders open a short position in the hope that the price will go down in the future.

Eg. If a trader, trading in the XRP/BTC pair, shorts 1000 XRP at 4x leverage. If the BTC equivalent of 1000 XRP is 0.09 BTC (considering XRP/BTC is at 0.00009000), then the exchange lends the trader 1000 XRP against a collateral of 0.0225 BTC. The trader owes the 1000 XRP to the exchange and can return this obligation at a later time, by buying it at a lower price.

Short position

1. Go to the Trading page > Select Margin > Select the desired pair.
2. Set up a Margin Buy order (specify the quantity, leverage, price).
3. (optional) If you select a BO (Bracket Order) fill in other details like Target Price and SL (Stop Loss Price).
4. Place your order by clicking on Short.

Example:  

Short with 3x leverage

If a trader, trading in the XRP/BTC pair, shorts 1000 XRP at 3x leverage. If the BTC equivalent of 1000 XRP is 0.09 BTC (considering XRP/BTC is at 0.00009000), then the exchange lends the trader 1000 XRP against a collateral of 0.03 BTC.

The trader owes the funds to the exchange and can return this obligation at a later time, by buying it at a lower price.

Find answers to all your questions here.

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