HOW TO PROTECT YOUR ASSETS WHEN TRADING MARGIN?
21/05/2022
By Damilola Ogungbayi olushola
Table of contents:
- Binance Margin’s Interest Rate Reduction
- Advice for protecting your asset when trading margin
- Why is Binance Margin good for you?
- Make your first trade on Binance Margin with the
low interest promo - Conclusion
BINANCE MARGIN’S INTEREST RATE REDUCTION
Binance Margin has launched a promotion to reduce interest rates for BTC, ETH, BUSD and USDT on the platform. During the promotion period, users may enjoy discounted annual interest rates that are as low as 0.8% with the mentioned assets.
Promotion Period: From 2022-03-21 11:00 AM (UTC) until further notice
New Tiered Interest Rates for BTC, ETH, BUSD and USDT on Margin:
Note:
Interest rates may differ depending on the VIP level of users, margin pairs and other factors. Please refer to Margin Data for a list of the most updated marginable assets and further information on specific limits and rates.
ADVICE FOR PROTECTING YOUR ASSET WHEN TRADING MARGIN
1.Choosing a trustworthy platform like binance:
Binance being the World leading crypto currency exchange has a Margin Insurance Fund that is designed to make up for losses incurred when the user’s Cross Margin or Isolated Margin account equity (asset minus liability) is less than 0, or when the user is unable to repay debts on Crypto Loan orders. In this case, the platform will inject the Liquidation Clearance Fees and part of the income from Margin, as well as Crypto Loans, into the Margin Insurance Fund.
2.Keep monitoring your LTV:
Due to the volatile nature of the crypto market, liquidation can be a common occurrence for people who do not monitor their assets. In addition to being disruptive of your plans, liquidation also incurs unnecessary liquidation costs and could cause you to lose your current position in the market.
To mitigate the chances of being liquidated, especially during extreme price movements, users are recommended to monitor their LTV regularly and adjust timely.
Step 1: Sign into your Binance account.
Step 2: Go to the [Ongoing Orders] page under Binance Loans and click [Adjust LTV].
Step 3: Adjust your LTV by moving the LTV bar, or manually add or remove the collateral amount.
Step 4: Once you are done adjusting, click [Add Collateral] or [Remove Collateral] to confirm your LTV adjustment.
3.Use Cross Margin or Isolated Margin with full
understanding:
As a crypto Margin trader always make plans for using Isolated or Cross Margin account.
Isolated Margin mode allows traders to restrict the amount of margin allocated to each position and only the balance used as margin gets liquidated.
Cross Margin gives traders far less control of the available balance, but it automatically margin adjust function can prevent liquidation.
WHY IS BINANCE MARGIN GOOD FOR YOU?
1.Diverse trading pairs:
Margin trading offers access to exotic trading pairs. This involves two cryptocurrencies paired together (e.g. BTC and ETH). Instead of buying or selling the currencies themselves, the trader is speculating on the relative performance of the two. With Binance, traders can trade pairs with leverage of up to 10X. Keep in mind that the more volatile an asset’s price is, the less liquidity the market will hold for it. This is because the asset is less reliable to bet on, causing fewer trades to be established in that market.
2.Multi-asset collateral:
Unique to margin trading is the ability for users to invest multiple assets as collateral to borrow leverage. On Binance, this can be done in the cross margin mode. So instead of investing BTC only into a BTC-based margin trade, investors can use their BTC and ETH, or BUSD, USDT, and so on, to denominate their collateral. Investing multiple assets as collateral allows traders to operate with more flexibility when opening trades.
3.Cooling-off period:
Binance has launched the Cooling-off Period for margin trading. The Cooling-off Period allows users to temporarily suspend all margin trading activity for a specified period. Users can set a Cooling-off Period of 1 day, 3 days, or 1 week as per their needs. During the Cooling-off Period, margin accounts cannot be used to borrow any cryptocurrencies.
4.Insurance fund:
The Margin Insurance Fund is designed to make up for losses incurred when the user’s Cross Margin or Isolated Margin account equity (asset minus liability) is less than 0, or when the user is unable to repay debts on Crypto Loan orders. In this case, the platform will inject the Liquidation Clearance Fees and part of the income from Margin, as well as Crypto Loans, into the Margin Insurance Fund.
Margin Insurance Fund rules:
- If your margin account goes bankrupt, i.e., there are not enough funds in the account to repay the debt after being force liquidated, resulting in negative equity (asset-liability), the system will use the Margin Insurance Fund to repay your debt.
- Similarly, if your Crypto Loan order goes bankrupt and the collateral is insufficient to repay the debt, the system will repay using the Margin Insurance Fund.
You can check the balance of your Margin Insurance Fund by clicking [Wallet] - [Margin] - [More Data] - [Insurance Fund], or you can also view it directly from [Margin Insurance Fund].
MAKE YOUR FIRST TRADE ON BINANCE MARGIN WITH THE
LOW INTEREST PROMO
Not only does trading with margin offer an interactive experience, but with the low interest promo it can also become a successful source of income. That is, of course, if carefully and strategically executed.
CLOSING THOUGHTS
Certainly, margin trading is a useful tool for those looking to amplify the profits of their successful trades. If used properly, the leveraged trading provided by margin accounts can aid in both profitability and portfolio diversification.
As mentioned, however, this method of trading can also amplify losses and involves much higher risks. So, it should only be used by highly skilled traders. As it relates to cryptocurrency, margin trading should be approached even more carefully due to the high levels of market volatility. Click on the link below to get started
https://www.binance.com/en/trade-margin/BTC_USDT?ref=331234001
To learn more on the low interest promo
https://www.binance.com/en/support/announcement/5a523469462a46629e793956d691ac3f?ref=331234001
