1. What's Margin Trading?
Margin trading is a kind of spot trading based on margin financing. Through making an initial investment as a deposit in exchange for certain times of available credit, investors are able to amplify their profits.
2. How to start margin trading?
First enter into the 'margin trading' page, before you start margin trading, you need to check Terms of Usage for BitZ Margin Trading, and in the following pages, there will be useful guides to show you how to start margin trading.
3. What is Margin Trading for? How to profit from a falling/rising market?
Margin trading can be used to buying long or selling short of trading pair:
a. Buying Long: For example, if trading pair A/B supports margin, and you want to buy long of currency A, then you borrow the currency B to buy currency A and wait until the trading pair price increase to your target price to sell all the currency you own in exchange for currency B. At this point, deducting currency B amount of what you borrow and the accrued interests, the net amount of B is the profit you get from this long trade;
b. Selling Short: for example, there is a trading pair A/B that supports margin, if you want to sell short of counter currency A, you will borrow in base currency A, and sell them all in exchange for B. When the price drops to the ideal price, you use B to buy A again. At this time, after repaying borrowing amount and accrued interest, the remaining A is the profit for selling short.
4. How many times of leverage does BitZ support?
Currently, BitZ provides users with 3 times of leverage. For example, the leveraged assets of BTC/USDT you own are 100USDT, and you can borrow 200USDT, then you have 300USDT available for trade.
5. How to calculate leverage interest?
Interest is calculated by applying the newest daily interest rate. In order to reduce the user's interest burden, the calculation of interest is:
a. Interest is firstly calculated on the current hour, later interest will be calculated on every natural hour.
b. The hourly interest rate is 1/24 of the daily interest rate.
c. Interests are not compounded, only based on the amount borrowed.
d. Once paid off, interest will immediately cease to accrue.
6. How to transfer in/out leveraged assets?
Transfer in: for the moment, users cannot directly buy leveraged assets with money, you can transfer cryptocurrency assets to your leveraged assets.
Transfer out: you can transfer out all your leveraged assets on the premises that you have not borrowed any assets, otherwise, you can only transfer the part of which the risk ration is bigger than 150%.
7. How to calculate the risk ratio of margin?
The formula of risk ration (debt asset ratio):
Risk Ratio = (Total Assets of Base Currency / Mark Price + Total Assets of Counter Currency) / (Outstanding Loan of Base Currency / Mark Price + Outstanding Loan of Counter Currency + Interests Payable of Base Currency / Mark Price + Interests Payable of Counter Currency)*100%
I. When risk ratio >150%, part of assets can be transferred out.
II. When the risk ratio≤130%, risk grade is an alarm, and the system will automatically notify the user through various methods.
III. When risk ratio ≤110%, the margin call of the trading pair will be triggered, and users will be forced to sell assets to meet the margin call.
8. What's the margin call?
When a margin call is triggered, the system will automatically revoke all unfinished limit order and profit-taking order or stop order. And based on the principle of repaying the loan in the currency of what you borrow, you will actively repay all the trading pair of the loan and accrued interest. If after paying off the loan of a certain currency, you still have a surplus of that currency, while you have a loan of another currency outstanding, the system will exchange the surplus with currency in debt in form of market order to pay off the loan. Once all the debts are paid down, the platform will charge 10% of the remaining assets as commission.
Maintenance Margin: the margin call threshold estimated by the system. When the price of trading pair falls (buy long) or rises (sell short) to the price, margin call will be triggered.
The formula of Maintenance Margin:
Maintenance Margin = (Total Assets of Base Currency - Outstanding Loan of Base Currency * Risk Ratio- Interests Payable of Base Currency * Risk Ratio) / (Outstanding Loan of Counter Currency * Risk Ratio + Interests Payable of Counter Currency * Risk Ratio - Total Assets of Trading Currency)* 100%
9. What's mark price?
a. Mark Price is the weighted average price of the major trading platforms in the world. Mark price is used to calculate risk ratio, effectively preventing undue influence caused by the transaction price of the single platform from affecting user's risk rate and margin call price in the extreme market.
b. Sample interval of mark price: every 2 seconds, BitZ obtainS the newest price from the major trading platform through API.
c. Abnormal event handling of mark price: If we fail to obtain the newest transaction price of certain exchange, that exchange will be excluded from the calculation of mark price this time.
10. No compulsory interest charge
During the loan period, our platform only calculates the interest and will not compulsorily deduct interest from your account.
BitZ Margin Trading upgrades Max Leverage ，details are subject to the latest announcement.
1. What’s finance?
Borrow: users borrow digital currency from other users to take part in margin trading.
Lend: users lend their idle digital currency to others to get steady finance income.
2. How long is the finance period?
At present BitZ supports two kinds of finance period: 10 days or 30 days, the lender can choose the finance period on the lending page.
3. How to calculate the income of leverage finance?
The calculation is based on the interest rate of lending currency amount and actual period (on an hourly basis) and deducts part of the risk reserve fund. The lender can choose the daily interest rate according to interest rate limits. The daily interest rate is influenced by demand and supply on the market.
4. Can I cancel the finance orders?
You can only cancel an unfinished finance order. If finance has already been lent, the order can’t be canceled, you can only wait until the other user repays currency.
5. What are the currencies for finance?
Finance currency is the same as margin trading currency.
6. What’s the risk reserve fund?
To protect platform users’ interests, BitZ takes part of interests generated from terminable currency loan as platform’s risk reserve fund, for covering finance users’ and advance lenders’ loss that can’t be paid off after auto liquidation when outstanding loss occurs interminable currency loan leverage trading (refers to in sharp fluctuation, assets in user’s “leverage asset” have negative balance after liquidation). BitZ reserves the right to dispose of the risk reserve fund in other ways.
7. What’s auto lending?
The user’s repayment of capital and interest will automatically generate a loan at the same interest rate and for the same period and be available for lending again.
8. How to ensure your finance order be lent out quickly?
User can check current finance maker information on finance home page, and set your interest rate the first maker interest rate in the market to make sure your finance to be lent out quickly.
9. Lending Method
To meet different users’ needs, BitZ’s currency loan service is divided into terminable currency loan and perpetual currency loan, and the user can enable auto reloan when choosing terminable currency loan. Notice:
a. If user choose terminable currency loan without enabling auto reloan, when the currency loan is due and user has not repaid currency, asset in the same currency of “leverage asset” will be automatically deducted to make the payment; if balance of the same currency in “leverage asset” can’t cover the whole payment, the corresponding coin pair asset of “leverage asset” will be auto liquidated to repay; if still fail to cover all the required amount, platform will use risk reserve fund to repay in advance.
b. If the user chooses terminable currency loan while enabling auto reloan when currency loan is due, if the user hasn’t repaid currency, the platform will automatically borrow currency at the optimal maker interest rate according to the total amount of unpaid capital and interests, and then auto repay the former order once reloan successfully. Users will bear the risk of lower margin risk ration leading to liquidation risk or outstanding loss risk caused by interest rate change and currency loan increase by themselves.
10. Can I repay a terminable currency loan earlier?
Yes, actual interest will be calculated based on the actual period.
11. How to borrow currency?
a. You can choose the current market on the currency loan homepage to borrow currency.
b. You can fast borrow currency on leverage page, fast currency loan is calculated on the optimal interest rate, and finance order at the front of the maker market will be settled first. And the optimal daily interest rate = (market volume a * interest rate a1 + market volume b* interest rate b2 + market volume c * interest rate c2 +········ market volume n * interest rate n1)/ total amount
12. How to prevent liquidation when a terminable currency loan is due?
You can choose auto reloan when borrowing, or enable auto-renew in currency loan order. Currency loan order will auto-renew at the optimal date after maturity.
Reference of rules of margin trading: