How to operate Coinbase leverage

Coinbase Leverage Trading allows eligible customers to borrow funds and increase their trading exposure, amplifying potential profits and losses.

Nov 11, 2024 at 01:40 pm

Step 1: Understand Coinbase Leverage Trading

Coinbase Leverage Trading allows eligible customers to borrow funds from the platform to increase their trading exposure and potential profits. With leverage, traders can amplify their returns, but it also magnifies potential losses if the market moves against them.

• Key Features:

  • Supported Trading Pairs: BTC-USD, ETH-USD, ETH-BTC
  • Maximum Leverage: 5x for eligible customers
  • Interest Rates: Calculated hourly and vary based on market conditions
  • Margin Calls: Triggered when account equity falls below a certain threshold
  • Liquidations: Forced closure of positions if margin call is not met

• Eligibility Requirements:

  • US-based Coinbase account holder
  • Identity and address verification
  • Trading activity within the last 30 days
  • Compliance with Coinbase's terms and conditions

Step 2: Enable Leverage Trading on Your Coinbase Account

• Desktop:

  1. Log in to your Coinbase Pro account.
  2. Click on "Settings" in the top right corner.
  3. Select "Trade" from the menu options.
  4. Toggle on "Advanced Trading" and click "Enable."

• Mobile App:

  1. Tap the "Portfolio" tab in the Coinbase app.
  2. Select "Add Leverage Trading."
  3. Enter your 2-step verification code and follow the prompts to complete setup.

Step 3: Create an Isolated Margin Account

An isolated margin account is a separate trading account used to isolate leverage trading activities from other funds.

• Desktop:

  1. In Coinbase Pro, click on "Margin" in the left sidebar.
  2. Select "Create an Isolated Margin Account."
  3. Choose a name and trading pair for the account and click "Create."

• Mobile App:

  1. Tap "Create Account" within the "Leverage Trading" tab.
  2. Select "Isolated Margin Account."
  3. Choose a name and trading pair and tap "Create."

Step 4: Transfer Funds to Your Margin Account

Before you can start trading with leverage, you need to transfer funds from your wallet to your isolated margin account.

• Desktop:

  1. Navigate to your Coinbase Pro margin account.
  2. Click on "Deposit" in the "Funding" section.
  3. Select the desired currency and enter the amount you want to transfer.
  4. Follow the on-screen prompts to complete the transfer.

• Mobile App:

  1. Tap on your leverage trading account in the Coinbase app.
  2. Tap on "Transfer Funds."
  3. Select the desired currency and enter the amount you want to transfer.
  4. Tap "Transfer" to complete the process.

Step 5: Place a Leverage Trade

Once you have funds available in your margin account, you can place a leverage trade.

• Desktop:

  1. Select the trading pair and trade type (buy/sell).
  2. Adjust the leverage ratio (1x to 5x) and position size.
  3. Click "Place Trade" to execute the trade.

• Mobile App:

  1. Tap on the desired trading pair.
  2. Adjust the leverage ratio and position size.
  3. Tap "Buy" or "Sell" to place the trade.

Step 6: Monitor Your Leverage Positions

It is important to closely monitor your leverage positions to manage risk and avoid potential losses.

• Desktop:

  1. Your open leverage positions will be displayed in the "Positions" tab.
  2. Pay attention to the "Margin Balance," "Unrealized Profit/Loss," and "Margin Ratio."

• Mobile App:

  1. Navigate to your leverage trading account and tap on "Positions."
  2. Monitor the "Exposure," "Unrealized PnL," and "Margin Coverage Ratio."

Step 7: Manage Margin Calls and Liquidations

If your account equity falls below a certain threshold due to adverse price movements, a margin call will be issued. You must promptly add more funds to cover the call within the timeframe specified. If you fail to meet the margin call, your positions may be liquidated at market prices, resulting in significant losses.