CEX.IO Guide: What is Crypto Leverage Trading

Trading with leverage allows enthusiasts on a budget to gain higher exposure to the market without requiring extra deposits. With CEX.IO Margin Trading, you essentially borrow credits from our platform and use your entire balance (your deposit + leverage money) to open short or long positions. 

With CEX.IO, you can leverage up to 5 times your initial balance. When your trade is successful, simply repay the borrowed amount along with applicable fees and retain the majority of your earnings. A small percentage of your rewards goes toward fixed fees, which include:

• Trading fee (for opening and closing positions): 0.1%
• Liquidation fee: 1% of the position value
• Rollover fee: 0.005

But what if your trade is unsuccessful? Do you then return the credits you borrowed from CEX.IO? Here comes the most exciting part – you only lose credits you initially allocated to your trade (your initial trading balance, without leverage). When you close a position, the borrowed funds are returned automatically. The return amount is exactly the same as you borrowed. 

So, essentially, CEX.IO allows you to trade with more credits on your balance, letting you keep most of your outcomes, while in case of a downturn, you only risk the credits that were initially on your balance. 

To illustrate how trading with leverage works, we’ve prepared a practical example.

Let’s say you have $100 that you want to use to trade Bitcoin (BTC) on CEX.IO, and you decide to use 2x leverage. This means you can borrow an additional $100 from CEX.IO, giving you a total of $200 to trade with.

Scenario:

• Market Entry: You believe that the price of BTC will rise, so you open a long position with your $200.
• Price Movement: BTC’s price increases by 10%. Without leverage, your $100 would become $110.
• With 2x Leverage: Your $200 position increases by 10%, becoming $220.
• Reward Calculation: You close the position, return the $100 borrowed from CEX.IO, and your balance is now $120. After fees (0.1% for opening and closing positions, totaling $0.40), you have $119.60.

Key Takeaway: With 2x leverage, a 10% increase in BTC price resulted in a theoretical 19.6% profit on your initial $100, compared to a 10% without leverage.

Now, let’s increase the leverage. You have the same $100, but this time you decide to use 5x leverage. This allows you to borrow $400 from CEX.IO, giving you a total of $500 to trade with.

Scenario:

• Market Entry: You open a long position on BTC with your $500, anticipating a price rise.
• Price Movement: BTC’s price goes up by 10%. Without leverage, your $100 would become $110.
• With 5x Leverage: Your $500 position increases by 10%, becoming $550.
• Reward Calculation: You close the position, return the $400 borrowed, and your balance is now $150. After fees (0.1% for opening and closing positions, totaling $1.00), you have $149.

Key Takeaway: With 5x leverage, a 10% increase in BTC price resulted in a hypothetical 49% profit on your initial $100, significantly amplifying your outcomes compared to trading without leverage.

If you’re interested in boosting your purchasing power through the CEX.IO Margin Trading, here’s a concise 10-step guide to opening a position with a market order on CEX.IO:

1. Head to Margin Trading under the Products menu, select the Trading page, and choose your trading account and collateral currency.
2. Pick the currency pair you want to trade.
3. Choose leverage for the trade.
4. Set position direction (long or short).
5. Select Market order as the order type.
6. Enter the amount to trade, considering the minimum and maximum order limits per pair.
7. Review order parameters like Required Margin and estimated Fee.
8. Set Protection orders (Take Profit and Stop Loss) if desired.
9. Click Open Long/Short to initiate the trade.
10. Review and confirm order details in the pop-up, then proceed or go back to edit if needed.

You’ll receive a pop-up confirming order placement and status.

Leverage trading with CEX.IO empowers users to amplify their results, potentially allowing them to make the most of both upward and downward market trends. By using borrowed funds, traders can enhance their resources in an attempt to achieve greater rewards from shifts in cryptocurrency markets. 

Additionally, CEX.IO’s Margin Trading supports hedging strategies, enabling traders to potentially mitigate their overall risk exposure by balancing outcomes across different positions (long and short). With the flexibility to trade in both rising and falling markets, CEX.IO provides a versatile platform for traders looking to optimize their strategies, increase their risk exposure, and minimize potential losses.