- Margin Trading Glossary
- Margin Trading
Margin Position Types
Available Order Types
- Stop loss and forced liquidation
- Multiple target orders
- Open a Margin Position
- Close a Margin Position
- Changing margin (or changing leverage)
- How to add margin (or reduce leverage)
- How to remove margin (or increase leverage)
- Important Points to keep in mind when changing margin
- Trade Charges, P&L Calculation Schema
Fees for Trading
Interest Calculation
P&L Calculation
- Margin Trading Rules
- Margin Trading Mechanism
Entry Order
Target Order
Stop Loss (SL) Order
Exit Order
- Additional Terms
This section aims to provide a glossary to explain all the commonly used terms in margin trading.
Total Balance: CoinDCX Pro uses a common wallet system for spot and margin trading. Total assets value is the total sum of tokens in your CoinDCX Pro wallet account for Spot, including available balance and balance on hold (locked balance).
Available Balance: The total amount of tokens that are currently available for trading either in Spot Trading and Margin Trading. This balance can be used in deposits/withdrawals of funds without any restriction.
Locked Balance: The amount of tokens which is unavailable for creating orders, usually refers to the tokens that are currently in use for open orders.
Borrowing limit: It is the max quantity of tokens available to borrow of the corresponding token pairs. The leverage available is common to all the platform users and CoinDCX Pro would determine the maximum leverage (range varies from 1x to 5x) based on volatility, funds availability and liquidity in the selected token pairs.
Target Price: The price at which the trader plans to buy/sell or close the order position is called the Target Price. When the Target price is hit, the trade is closed and the trader’s funds are settled according to the P&L incurred. Target price feature is available if the trader checks the Bracket order checkbox.
Stop Loss (SL) Price: The price at which the trader wishes to Stop Loss is the SL Price.
Position Quantity: A position is the quantity of crypto involved in trade. There are two types of positions: Long and Short. Depending on market trends, movements and fluctuations, a position can be profitable or unprofitable.
P&L: The Profit or Loss is the indicative Profit or Loss in an open position. Note that, until the position is closed, the profit or loss is not actually realized or added/deducted from the trader’s balance.
Limit Margin Order: This is a limit order with leverage. Elements of this order like Stop Loss Price, Target Price are the same as Market Order.
Market Margin Order: This is a market order with leverage. Elements of this order are – leverage, Target Price and Stop Price.
Long Position: When you buy, you are opening a long position as you expect the price to go up.
Short Position: When you sell, you are opening a short position as you expect the price to go down.
Multiple target Orders: In multiple target orders, you can select to sell your coin at different price points in parts instead of making one single order.
Initial Margin: Initial margin is the initial price that the investor must pay for with his own collateral. Initial margin depends on the leverage taken.
Margin Taken: Margin Taken is the fund lent by the exchange to the trader in exchange of the collateral.
Price: This is the price at which the trader seeks to gain entry/ open position in the trade.
Estimated Liquidation price: It is the highest estimated bid in the case of long position or the lowest ask in the case of a short position at which forced liquidation occurs. It is only an estimate as one cannot estimate the real price at which the forced liquidation will occur since it depends on the number and size of your open positions and orders, current market and order book conditions, and current value of your collateral for example.
Base Price: it is the price at which your position should be closed in order to breakeven.
Unrealized P/L: Estimated P&L in case you were to close your position. It includes the lending fees that are already paid.
Unrealized Lending Fees: It is the estimated value of outstanding fees on your currently-open loans.
Forced Liquidation: When all your positions or a part of it are closed automatically for preventing further losses and ensuring no default on your loans, a forced liquidation occurs. They are executed by using one or more market orders and are affected by the order book liquidity at the time of these orders that will determine the extent of your losses from the liquidation. It occurs when your current margin falls below your Maintenance Margin.
Maintenance Margin: It is the % of your Total Borrowed Value that your Net Value must be for avoiding a forced liquidation.
Total Borrowed Value: It is the total BTC value of your open loans and is determined by the current amount of your BTC borrowing plus the amount of BTC that you would need for buying on the current order books, the total of all other currencies you are borrowing at that moment.
Long Position: In this position, funds are bought by the trader and then sold at the target Price. Traders open a long position in the hope that the price will go up in the future.
E.g. if a trader, trading in the XRP/BTC pair, longs 1000 XRP at 2x leverage. If the BTC equivalent of 1000 XRP is 0.09 BTC (considering XRP/BTC is at 0.00009000), then the exchange collects a collateral of 0.045 BTC only. Thus, allowing 2x leverage.
In this long position, exchange forwarded 0.045 BTC to the trader for buying 500 XRP, in addition to the 0.045 BTC held by the trader.
Short Position: In this position, funds (that the trader doesn’t own) are sold first and then bought at a later time. So, when you open a short position, the exchange sells the crypto on your behalf and you owe the quantity of crypto involved in the trade, to the exchange. At a later point, you return this obligation by buying the coin at a lower price.
Traders open a short position in the hope that the price will go down in the future. E.g. If a trader, trading in the XRP/BTC pair, shorts 1000 XRP at 4x leverage. If the BTC equivalent of 1000 XRP is 0.09 BTC (considering XRP/BTC is at 0.00009000), then the exchange lends the trader 1000 XRP against a collateral of 0.0225 BTC.
The trader owes the 1000 XRP to the exchange and can return this obligation at a later time, by buying it at a lower price.
Limit Margin Order: This is a limit order with leverage. Elements of this order like Stop Loss Price, Target Price are the same as Market Order. Leverage can be selected by toggling between 1x to 4x.
Market Margin Order: This is a market order with leverage. Elements of this order are – leverage, Target Price and Stop Price.
Every margin order has its own liquidation price which depends on the leverage used for the respective order. The maximum loss that a user can incur is the balance locked for a margin order. If a situation for liquidation arises, CoinDCX Pro will place a market sell order immediately.
CoinDCX Pro will apply the following rules for liquidation of a margin order –
a) Long:
i) Ideal liquidation price = (Entry Price – Entry Price/Leverage)
ii) A safety factor of 7.5% (wrt entry price) has been applied to take market slippage and order placement latency into account. This will prevent bankruptcy of the user’s account
iii) Actual Liquidation Price = Ideal Liquidation Price + (0.075 * Entry Price), which is rounded up according to currency’s price precision
b) Short:
i) Ideal liquidation price = (Entry Price + Entry Price/Leverage)
ii) A safety factor of 7.5% (wrt entry price) has been applied to take market slippage and order placement latency into account. This will prevent bankruptcy of the user’s account
iii) Actual Liquidation Price = Ideal Liquidation Price – (0.075 * Entry Price), which is rounded down according to currency’s price precision
Previously, a single order contained a single entry and a single target (exit) order, meaning that suppose you have 100 XRP long, then you can just specify a single target price where those 100 XRP would be sold at. But now, Margin trading supports multiple target orders, meaning that you can decide to sell those 100 XRP at different price points in parts. For example, you may sell 40 XRP at 8000 sats and the remaining 60 XRP at 7000 sats. So you have finer control over your target orders and you may utilize multiple price points to close your position in parts, with individual control (for editing or cancelling each [part] target order).
Previously, a single order contained a single entry and a single target (exit) order, meaning that suppose you have 100 XRP long, then you can just specify a single target price where those 100 XRP would be sold at. But now, Margin trading supports multiple target orders, meaning that you can decide to sell those 100 XRP at different price points in parts. For example, you may sell 40 XRP at 8000 sats and the remaining 60 XRP at 7000 sats. So you have finer control over your target orders and you may utilize multiple price points to close your position in parts, with individual control (for editing or cancelling each [part] target order).
2. If this is your first target order for this position, it would directly open a form where you can add a target order of market or limit type for closing position.
Examples:
1) Long with 4x leverage
If a trader, trading in the XRP/BTC pair, longs 1000 XRP at 4x leverage with an entry price of 0.00008000
The user may also specify 2 target orders of this position: 500 XRP at 0.00008100 and other 500 XRP at 0.00008200
2) Short with 2x leverage
If a trader, trading in the XRP/BTC pair, shorts 1000 XRP at 4x leverage with an entry price of 0.00008000
The user may also specify 3 target orders of this position: 300 XRP at 0.00007800 and other 300 XRP at 0.00007600, and the remaining 400 XRP at 0.00007500
Note: The final settlement normally happens instantly, but can take up to 24 hours in some rare scenarios.
Total fee = Entry fee + Exit Fee
Entry fee = (Quantity * Avg entry price) * (fee percent)/100
Exit fee = (Quantity * Avg exit price) * (fee percent)/100
CoinDCX Pro automatically gives you the additional margin and charges interest @0.05% per day (~0.002% per hour). Additional margin is the amount a trader has borrowed from the exchange to fulfil a particular order. When the position is open for more than 1 Hour, the interest expense is calculated based on the following formula:
Interest Charged = (Interest rate Per Hour * hours * additional margin) / 100
where Additional margin = (Order Value – Locked Balance for the order).
In case of a bracket order and if your order is partially settled, you will be only charged for the margin which is remaining on your open order, only for the duration the order is open on DCXmargin. In case you add more margin in an open position, the interest rate will only be charged on the updated (lesser) borrowed amount.
– These rules are formulated under a lawful, fair and transparent way to maintain reasonable control of the lending or borrowing of the digital asset and margin trading, preserve an orderly market, and protect the legal rights of all investors.
– The loan and margin trading stated in this document is the investment behaviour in which an investor provides collateral to CoinDCX Pro (“We”, “Us”, “Our platform”, “Our”) to borrow assets for trading.
– All loan and margin trading on https://coindcx.com shall comply with the rules stated in this document. Other activities not stated in this document shall comply with “CoinDCX Terms of Service” and other rules set on the website https://coindcx.com
– We provide information release, management and risk control services for token lending. However, there have been no promises, guarantees or warranties suggesting that any trading will result in a profit or will not result in a loss. Investors shall carefully consider whether such an investment is suitable in light of their own financial position and investment objectives, and invest responsibly at their sole discretion.