Binance margin trading

Margin trading on a cryptocurrency exchange Binance – is a trading method cryptocurrencies with the use of borrowed funds. The advantage of trading with leverage over spot trading is that traders can access amounts they do not have on their balance. And, in the case of a successful transaction, the trader can make a profit, much more than if he traded on the traditional spot market with the funds he has on his balance. General information about trading with leverage can be found on the main page of Binance Margin section of the website binance.com.

The disadvantage is that if a trade is unsuccessful, the trader’s loss will also be greater than in traditional trading. Initially, leveraged trading was aimed at low-volatility markets where it was difficult to make a profit because of low fluctuations in the price of traded assets. But now it is used everywhere, including the highly volatile cryptocurrency market, and is very risky in this case.

In traditional markets, leveraged funds are provided by a broker, but on crypto platforms, usually by other traders, crypto exchanges to a lesser extent. There are short video tutorials here, “Margin Trading Guide for Apps” and “Margin Trading Guide for Web Interface. It outlines how to trade and gives “Useful Links” that lead to the pages:

• “Loan Interest Rate and Cross-Margin Limit”, which shows limits, lending opportunities, and other important information on all cryptocurrencies by client status, which you will need to review before you start trading.
• “Isolated Margin Level Data” on risk ratios and other parameters in pairs.
• “Insurance fund” with statistical data.
• “Trading Rules” show the allowable minimum transaction size, the minimum order size by cryptocurrency and fiat markets.

As a “Beginner’s Guide” on the main page there is a “Margin Trading FAQ”. On the right side is a “More Info” link, which leads to the “Frequently Asked Questions”, where you should select the “Margin Trading” subsection and go to the list of articles on this topic. At the very bottom, above the “Trade” button is the “Binance Margin Account Agreement”, which describes the terms of leveraged trading.

Order and testing

To activate a Binance account for leveraged trading, you need to hover over the “Trade” section at the top of the site and select “Margin” from the drop-down menu. Before you start trading, you need to read the “Welcome to Binance Margin” information. In particular, it specifies the order of transition to trading, which includes 5 steps:

• Account selection on the right side of the trading terminal. A “Cross” account allows you to place orders on all trading pairs, profit and loss will affect the assets of the entire account. “Isolated”: only one trading pair is traded and the risks apply only to it.

• In the service of buying/selling crypto-assets you need to click on “Transfer” under the price chart, then the service of internal transfer of funds from the spot account to the margin account is activated.

Borrowing is also done in the buy/sell service. The maximum loan amount depends on the user’s collateral and its limits in a particular trading pair.

• Margin orders are placed in the same place as in spot trading, trading methods and strategies are similar.
• Repayment is made by clicking in the same service.

After that, you can close the welcome section, but you shouldn’t do that, especially for those who are planning to trade with leverage for the first time. At the bottom of this section there is a “Guide”, you need to click on this button and go to the introductory video lesson. After the lesson, you will need to take a test of 12 questions. However, if you still have questions, you will need to click on the “Go to Cross-Margin Trading Rules” link to the “Frequently Asked Questions” page. And in order to navigate leveraged trading on Binance, it will be optimal to study each of the articles on the topic.

Insurance fund

The Binance Margin insurance fund allows you to mitigate the consequences of unsuccessful, unprofitable leveraged trading. The fund is made up of liquidation fees, shares of income from leveraged trading and crypto loans. It is designed to compensate for losses if the balance (both cross and isolated) “goes negative”, i.e. becomes less than zero or the client has no funds to repay the loan.

Indebtedness of the trader arises after the forced liquidation of the position, which he had previously placed. Debts also arise if there is not enough collateral to repay the debt. These debts are covered by the fund. You can check the status of the fund in the “Wallet” section, where you have to go to the “Margin Wallet”, then to the subsection “More Data” and finally to the “Insurance Fund”. The interest charged for liquidation can be viewed by the client in the “Frequently Asked Questions” section.