Bitcoin Margin Trading


What is Margin Trading

Margin trading is a method of trading that involves borrowing funds. It allows you to trade more than you’d be able to trade using your funds only. CEX.IO currently offers margin trading with 1:2 and 1:3 leverages on BTC/USD, BTC/EUR and ETH/BTC pairs. More options will be added in future. You can view fees associated with margin trading here.

Advantages of Margin Trading on CEX.IO

Automatic funds borrowing

Borrowing funds is done automatically and simultaneously with position placement.

No extra accounts

There is no need to open any extra margin accounts to trade with leverage.

Negative balance protection

Risk-preventing system guarantees that margin trading cannot move your balance to negative values.

Several leverages available

Open position with 1:2 or 1:3 leverage, depending on the amount you want to take.

Guaranteed stop loss

The system reserves part of the order book for position to be closed at the price, not worse than stop loss.

Efficient rollover fee

Rollover fee is charged only while position is opened and is not charged for the first 4 hours.

How to make profit on Bitcoin price growth

If you wish to profit from growing Bitcoin price, consider opening a long position. Here’s how it works:

Let’s say, the current price of Bitcoin is $600 and you expect that the price will grow. You can make profit from buying Bitcoins now for $600 and sell them later at a higher price.

You have $300 on balance and open a long position with 1:2 leverage for 1 BTC, which means that you use $300 of your own money and borrow another $300.

You close the position when price is $800, the $300 you have borrowed is automatically returned, and your profit is $200 minus fees.

This is a lot more than you could have earned using only your own balance.

How to make profit on Bitcoin price fall

You can also earn money when Bitcoin price goes down. In terms of margin trading, this is called short position.

For example, if the current price of Bitcoin is $600, and you expect that the price will fall, then you can get profit from selling borrowed Bitcoins for $600 now and buying them back later at a lower price.

You have $300 on balance and open a short position with 1:2 leverage for 1 BTC, which means that you pledge in $300 of your own money and borrow 1 BTC.

You close the position when price is $400, the 1 BTC you have borrowed is automatically returned, and your profit is 0.5 BTC minus fees.

This could be impossible without margin trading.