CEX.IO margin trading

Margin trading is a strategy of borrowing funds to open trading positions, which helps increase the trader’s profits. The income from trading without leverage is multiplied by its coefficient. Margin trading provides an opportunity to increase the profitability of your own coins, since borrowed capital is used to make profits.

To use the function on CEX.IO, from the home page cex.io you have to go to the section of the same name. It will redirect you to broker.cex.io, where there is a detailed description of this type of work and a knowledge base that must be studied before you start trading.

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To start a partnership with cryptocurrency exchangeYou will need to create an account and confirm your email. Those who are already registered on CEX.IO can skip this step. The next step is to fund your account with any supported cryptocurrency: BTC, USDT or ETH. After that it is possible to open long and short positions with any pairs available on the platform. The advantages of margin trading include:

• Narrow spreads. It is possible to profit even from insignificant price movements.
• No fees. The exchange allows you to save and increase your return on investment by trading without commissions.
• High performance. On the platform you can quickly place and modify orders, open/close positions to take advantage of opportunities in the market.
• Liquid order book. The execution of small and large orders is available, as the aggregate liquidity from different exchanges is used.

Users who do not know if the exchange conditions will suit them and do not want to risk real money can test a demo account. This does not require registration. All you need to do is go to the exchange site and click on “Try demo account. You will then receive tools and test the platform in a simulated environment, which reflects market conditions.

Margin Call and Liquidation Levels

If opening a position with leverage, you must be able to maintain a clearly specified amount on your balance sheet to keep them open. The sufficiency of the amount is measured by the Margin Level indicator. When the margin reaches a certain threshold, the user receives a notification stating that there may be a risk of closing positions in order to restore the desired level. After receiving this message, which is called a Margin Call, the user decides what to do – close partially, accept the risk or add funds to increase margin.

CEX.IO has set Margin Call levels to alert the trader so they can change the situation before liquidation. They take into account the amount of leverage. Most often the Margin Call levels are 75 and 50%, and liquidation begins in a situation where the margin reaches 25%. This applies to leverage from 2 to 25x. If the trader uses 50x or 100x, the Margin Call is 90 and 70%, and liquidation occurs at 50%. Since 50x and 100x are considered riskier, even small volatility can put capital at risk. Therefore, the requirements are stricter to limit traders’ losses.

If it is necessary to keep positions open, the margin must be greater than 25% for 2-25x and from 50% for 50 and 100x. Otherwise liquidation will close each offer to restore the level. This process is ensured by creating a market order for the entire position size. Once closed, the margin is reduced and its level is increased. At liquidation the attached orders will be cancelled.

Trading accounts

The exchange allows you to create several accounts. They can be used to implement different strategies. Margin is calculated individually. The income of one account on a position can be used to satisfy requirements on another (cross). But the situation is different for different accounts. The profit on one of them, which is successful, cannot be used to satisfy the demands on the losing accounts (isolated margin). When a liquidation occurs on one account, it cannot affect positions opened on another. When it is necessary to liquidate offers in different accounts, these processes do not affect each other.

Cross and isolated margin

Cross is a situation in which positions are compensated by each other. The surplus for one can be used to satisfy the requirements for the other. For all positions together, the margin is provided by the balance. If some positions are unprofitable, they can be supported by the income of others and the balance of money. In the case of an isolated option, the margin of one or more positions cannot be used to meet the requirements of the others. The surplus created by profitable positions or the balance does not support positions that are unprofitable. This option helps limit losses. The income from successful offers and the amounts on the balance sheet will not suffer if unprofitable ones are liquidated.

CEX.IO exchange works with two options – both cross and isolated. Multiple accounts are available. Transactions in one of them can share the responsibility of keeping the margin above the level calculated for liquidation. When the margin between positions that are successful and unprofitable in one account is greater than the liquidation level, they will not be closed. The difference between the offer and CEX.IO is that even the unrealized profits of successful positions support the requirements in the cross. Unrealized gains are added to capital.

The user’s funds are taken into account when calculating the level, which must be maintained. When isolated margin is used between accounts, liquidation occurring on one cannot affect the situation on the other. This helps contain losses. Using crosses on accounts and the isolated option between them allows you to test different trading strategies and control risks.