Margin trading on OKX

Margin trading – it is trading “with leverage” or leverage, that is, using borrowed funds, in this case, the funds of the exchange OKX. Trading with borrowed funds is one of the riskiest methods of trading, especially trading cryptocurrencies. So before you start trading, you need to learn the basics of leverage and practice the actions in the demo mode on the site okx.com.

The advantages of trading with leverage:

• The trader can invest more funds than in his account, and, accordingly, receive more profits;
• The trader can enter into transactions at the right time, without waiting until he has the necessary amount in his account;
• no commission for use, the trader settles with the broker from the profit;
• With a certain skill, a trader can trade at a profit in a falling market.

As for the disadvantages, trading with leverage has one, but critical one: if a trade is unsuccessful, the trader will lose more than he has in his account. This is why trading with leveraged funds is highly risky and not recommended for inexperienced users. There are two methods of leveraged trading on OKX:

• Classic: buy cheaper, sell more expensive. The broker receives a deposit from the trader, the broker provides the leverage, after the transaction the trader settles with the broker with profit or loss.
• On events: the trader focuses on an event which in his opinion should affect the price, chooses leverage, executes a trade and pays the broker.

The amount of leverage provided depends on the particular currency pair, on liquidity, on the status of the client’s deposit. The exchange has tools that allow you to slightly reduce the risk of loss when trading with borrowed funds. The main one is Stop Loss, which is set in the trading platform: it is the value of asset price, at reaching which a transaction is automatically closed. The stop-loss mark is set by the trader himself.

Terminal

The price chart is located in the center of the terminal. In the upper part of the chart you can change timeframe, choose how the trend is displayed, select technical analysis tools, refine trade settings, select the type of price on which the trend is plotted or change the OKX chart to the popular TradingView.

On the left side of the price chart is a simplified buy/sell service, by default in the pair BTC/USD. You can enter the desired number in the “Amount” box and select short or long. If you need to select another pair, you can do it on the left side of the terminal, in the “Market” column.

There are many choices in the list of selectable assets, but the “All” and “Top” columns are the basics. Searching can be simplified by searching for a currency through the search bar at the top of the Market. At the bottom of the “Market” there is an option “Update for margin trading”. By activating it with a click, the user can select the type of trading account. By default, the account is “Simple”, and as the skill level grows, you can select the account “Single Currency Margin” (for advanced amateurs), “Multi Currency Margin” (for professionals) or “Portfolio Margin” (for professional traders).

The “Order Book” is located to the right of the price chart. The upper part shows sales statistics, the lower part shows purchase statistics. “Trading history” is a tab, where you can see how the price of the asset changed. Sell and Buy orders are placed under the price chart. In the upper part of the service, select the type of margin: cross or isolated, and the size of the leverage. Cross-margin implies opening a position backed by the entire amount of funds on the client’s balance. Isolated margin implies securing a part of the balance, some fixed amount.

By clicking the 3.00X button, the leverage selection service is displayed on the monitor. The range of leverage is very large, from 1 to x125. Below the buttons “Limit”, “Market” and “Stop” are located. “Limit” allows you to limit a certain amount to trade, “Market” allows you to place an order at the “best price” calculated on the platform. “Stop” is a menu for selecting stop orders of several types. When selecting stops, the monitor will display a reminder that trigger orders may fail for various reasons, in fact, this is a warning of the risks of contingent trading, and by clicking “Ok” the trader confirms that he is aware of them and is ready to continue trading.

Then enter the currency to sell or buy, the amount of currency and the ability to set stop-loss and take-profit. At least stop loss is mandatory for margin trading. After entering all required data user places the order by clicking “Buy” or “Sell” button. To prevent losses when trading with leverage, it is necessary to follow the rules of risk management:

• Do not overestimate your capabilities and succumb to the excitement of opening orders with a large leverage;
• You can not trade on the whole deposit: it is considered correct to use for trading with a leverage the amount, the loss of which will not be critical even with the loan;
• trading should be carefully assessing the risks, not rushing, strictly following the chosen strategy;

OKX also warns against developing any fraudulent leverage schemes on the exchange, as they will still lead to very large losses.