Margin trading is a way of using funds provided by a third party, to conduct asset transactions. Compared with regular trading accounts, Margin trading accounts allow traders to obtain more funds and support them in using positions. Margin trading blends elements of Spot and Futures trading, allowing users to trade Cryptocurrencies using leverage. The leverage that can be used depends on the trading platform and the type of margin trading that is being used (cross margin, isolated margin). For Isolated Margin only a particular asset can be used as a collateral to the opened position, while Cross Margin allows traders to use any asset accepted by the exchange as a collateral.
Margin trading is used in several cases. One of the most popular used cases is to hedge against a portfolio or other asset. Hedging involves opening new positions that are negatively correlated with existing positions and helps traders to mitigate potential losses.
When Margin trading, traders must be cautious to market changes that occur, as margin calls may happen often. A Margin Call takes place, when a trade goes unfavourably, potentially costing the trader large amounts of losses, depending on their leverage ratio. In cases like this the exchange will perform a Margin call, in which the trader has two options, reduce position or add collateral.
Bequant.io offers Margin Trading in two exchanges: HitBTC, Bitfinex and Okex. There is a potential that more exchanges will be offered to our customers for Margin Trading.
HitBTC offers Isolated Margin and Bitfinex offers Cross Margin, while Okex offers native isolated- and cross-margining.
Limitations on Tranfers.
In customer portal transfers to Hitbtc margin are not available. Execution of these transfers is made via exchange api.
Transfers between margin and spot markets in a single account are not available, applicable for Bitfinex and Hitbtc. Execution of these transfers is made via exchange api and/or creation of separate (new) account for margin trading.
On Okex you will have Unified account which allow you to trade spot, margin, futures, perpetual swap, options from single account, so that you are able to use the single balance for margining as well.
Exchange api methods for transfers via api.
All transfers available via API:
Bitfinex - https://docs.bitfinex.com/reference#rest-auth-transfer (from: exchange, to: margin)
HitBTC - https://api.hitbtc.com/#create-update-margin-account