Margin trading is a form of trading that allows you to trade with borrowed assets. Here at Coinmetro, we even offer the use of leverage which allows trading in larger value than your available funds. It also allows you to short (sell) assets you don’t own, in anticipation of buying them back later at a lower price and keeping the difference as profit.
How does Margin trading work?
When you make a trade on the Coinmetro Margin Platform, you simultaneously buy one asset and short (sell) another. For example, if you buy BTC/EUR, you are buying BTC and shorting EUR. If you sell BTC/EUR, you are shorting BTC and buying EUR. The amount that you “short” is automatically borrowed from Coinmetro or other lenders, and paid to the trade counterparts.
On the Coinmetro Margin Platform, this is handled automatically behind the scenes. You pay interest on the borrowed amount while the trade is still open, but this cost is usually small in comparison to trading profits and losses. Once the trade is closed, the borrowed funds are automatically repaid.
What is the difference between Margin and Exchange Trading?
When an order on the Exchange Platform is filled, you exchange a specified quantity of one asset with a quantity of another asset and your wallet balances for the two assets update immediately.
When you margin trade, you place an order to buy or sell a particular asset against another; but when the order is filled your wallet balances do not update. Instead, an open position is created which has a floating profit or loss (P/L) that automatically updates as market prices change.
Following our recent platform update, our effort to improve your trading experience is continuing with the introduction of a new Price Warning feature. The Slippage Warning Dialog is there to show you in real-time if any of your orders could lose more than 3% due to slippage. This is an important component of your trading arsenal, as it will warn you immediately before confirming orders. Use this to your advantage, so you can be aware, act fast and stay on top of the markets.
The Price Warning Dialog shows up if the user submits an order which could lose more than 3% due to slippage. The mechanism works like this:
No warning is shown when slippage is under 3.00%
It shows a green warning from 3.00% to 4.99%
It shows an orange warning from 5.00% to 9.99%
It shows a red warning from 10.00%+
The calculation takes the size of the order into account and adjusts the slippage warning percentage accordingly
It will appear when placing a new market/limit order or editing an open order
It will appear on both the Exchange and Margin platforms.
What does it not do:
Take spread into account (for now)
It will not appear when doubling or closing a % of Active Positions on Margin (for now).
Coinmetro’s Demo Platform is always available if you would like to practice without risk. Please note that this article is not to be seen as trading or financial advice. It is for educational purposes only.