Under token trading page, select the trading pair tagged with "5X" and click "5X Leverage" on the right side to enter leverage trading.
This article aims to provide a glossary to explain all the commonly used terms in leverage trading.
Assets
Balance in the account of that margin trading pair：Balance in the account of that margin trading pair, including available balance and balance on hold.
Transferred Assets: The amount of tokens transferred from other accounts to your Margin Account for Spot.
Borrowed Assets: Total Borrowed amount of tokens by using your available asset in Margin Account for Spot as collateral.
Available Assets: The total amount of tokens available for trading in Margin Account for Spot.
Assets on hold: The amount of tokens which is unavailable for creating orders, usually refers to the tokens that are currently in use for open orders.
Leverage
Borrowing limit: Max quantity of token available to borrow of the corresponding token pairs. OKEx would determine the borrowing limit for a user with maximum leverage and other risk parameters.
Maximum leverage formula: Max leverage = (Total assets - outstanding loan - interest payable) * (max leverage multiplier - 1) - outstanding loan
Example of maximum margin lending: A user holds 5 BTC in total. Outstanding loan is 1 BTC and interest 0.01 BTC. If the maximum leverage level is 5x, the maximum margin lending amount = (5 - 1 - 0.01)*(5 - 1) – 1 = 14.96 BTC”
Margin ratio and Forced liquidation
Margin ratio: The indicator for evaluating margin account's possibility of triggering forced liquidation. When the margin ratio ≥50% under 3x leverage or ≥25% under 5x leverage, the surplus balance can be transferred out to Spot Account. When margin ratio is ≤20%, it indicates a high-risk status. The system will notify the user automatically via SMS. When margin ratio is ≤10%, forced liquidation will be triggered and a SMS will be sent to notify the user.
Margin ratio Formula: Margin ratio = [(Total Assets (In Quote Currency) – Borrowed Assets (In Quote Currency) – Interests Payable (In Quote Currency) ) / Last Trade Price + (Total Assets (In Base Currency) – Borrowed Assets (In Base Currency)– Interests Payable (In Base Currency)]/(Borrowed Assets (In Quote Currency) / Last Trade Price + Borrowed Assets (In Base Currency) ) * 100%
Example of margin ratio calculation: A user trades BTC/USDT on the margin trading market, the quote currency is USDT and the dealt currency is BTC. The user holds 0.3 BTC, borrows 0.6 BTC, and then sells all 0.9 BTC. After a while, the total asset in the dealt currency is 0 BTC and that in the quote currency is 9,000 USDT, the interest is 0.001 BTC and the last trading price is 9,710.28. The margin ratio = [(9000-0-0) / 9710.28 + (0-0.6-0.001)] / (0/9710.28+0.6)*100% = 54.31%”
Forced liquidation: When margin ratio ≤10%, forced liquidation will be triggered. All positions will be taken over by the platform and force closed in the market.
Margin Call Ratio: 10%
Estimated Price on Margin Call: A certain amount of margin is required for leverage trading in OKEx. When unfavorable changes occur in the market, such as a reverse trend of market direction which contradicts the direction opened, the account balance may shrink below the perimeter, and system will force liquidate all holding positions at best bid /offer to pay off the debt.
Formula (Est. Price of Margin Call): Forced Margin Call Est. Price = (Borrowed Assets (In Quote Currency) * (1+Margin Call ratio) + Interests Payable (In Quote Currency) – Total Assets (In Quote Currency) / (Total Assets (In Base Currency) – Interests Payable (In Base Currency) – Borrowed Asset (In Base Currency) * (1+Margin Call Ratio))
Example of margin ratio calculation: A user trades BTC/USDT on the margin trading market, the quote currency is USDT and the dealt currency is BTC. The user holds 0.3 BTC, borrows 0.6 BTC, and then sells all 0.9 BTC. After a while, the total asset in the dealt currency is 0 BTC and that in the quote currency is 9,000 USDT, the interest is 0.001 BTC and the last trading price is 9,710.28. The margin ratio = [(9000-0-0) / 9710.28 + (0-0.6-0.001)] / (0/9710.28+0.6)*100% = 54.31%” “The estimated forced-liquidation price = (0 + 0*54.31% + 0 - 9000) / (0 - 0.001 - 0.6 - 0.6*54.31%) = 9710.204”
Short
Short Selling: Selling of tokens which the user does not own, and buy back after a period of time.
Interest and Repayment
Interest Computation:The loan borrower should repay the capital and interest on the loan maturity date. The interest is calculated in simple interest on an hourly interest rate (daily rate / 24). An interest-bearing hour is counted from the time the loan is made. Every 60 minutes is considered as 1 hour (counted from the borrowing time; partial hour is considered as full hour). Interest is incurred at the time the loan is made and every 1 hour afterward.
Repayment: Repayments will be used to cover the earliest loan orders, and pay off interest before principal. The repayment status will change to completed once all the debts have been paid off, then further interest will not be applied for the order.