How to use margin trading in AscendEX

By understanding the risks and leveraging reputable brokers like AscendEX, traders can harness the power of margin trading to enhance their profit potential while managing associated risks.

Nov 27, 2024 at 06:35 pm

How to Use Margin Trading in AscendEX

Margin trading allows traders to amplify their potential profits by borrowing funds from a broker. This can be a powerful tool but also comes with additional risks.

Before You Start

1. Understand the Risks: Margin trading can magnify both your profits and losses. You can lose more than your initial investment.
2. Choose a Reliable Broker: AscendEX is a reputable and well-regulated exchange that offers margin trading.
3. Fund Your Account: You'll need to deposit funds into your AscendEX account to start margin trading.
4. Enable Margin Trading: Go to the "Margin" tab in your AscendEX account and enable margin trading.
5. Select a Trading Pair: Choose the trading pair you want to trade with margin.
6. Set Your Leverage: Leverage is the amount of funds you borrow from the broker. Higher leverage means higher potential profits (and losses).

Placing a Margin Order

1. Enter Your Order: In the order form, specify the amount of the asset you want to buy or sell.
2. Set Your Leverage: Select the leverage you wish to use.
3. Set Your Order Type: Choose a market order to execute your order immediately or a limit order to set a specific price.
4. Review Your Order: Ensure that all the details of your order are correct before confirming.
5. Monitor Your Position: Keep an eye on your margin position to manage your risk.

Managing Your Margin Position

1. Monitor Your Margin Ratio: AscendEX will calculate and display your margin ratio, which indicates the level of your exposure.
2. Add Collateral: If your margin ratio falls below a certain level, you'll need to add more funds to your account.
3. Reduce Leverage: If your margin ratio is getting too high, you can reduce your leverage to lower your risk.
4. Close Your Position: If you need to close your margin position, simply reverse the order you used to open it.

Example:

Let's say you want to buy 1 BTC with margin.

1. Deposit: You deposit $10,000 into your AscendEX account.
2. Enable Margin: You enable margin trading and select a leverage of 5x.
3. Order: You place a market order to buy 1 BTC at the current market price.
4. Margin Calculation: AscendEX borrows $48,000 from you. You have a total position size of $58,000.
5. Margin Ratio: Your margin ratio is 58,000/10,000 = 5.8

Benefits of Margin Trading

• Amplify Profits: Margin trading can increase your potential profits.
• Hedge Against Price Fluctuations: Margin can be used to hedge against price fluctuations.
• Trade Illiquid Assets: Margin trading allows you to trade less liquid assets that may not have a lot of trading volume.

Risks of Margin Trading

• Increased Losses: Margin trading magnifies your potential losses.
• Liquidation Risk: If the price moves against you, your position could be liquidated and you could lose a significant portion of your funds.
• Stress and Anxiety: Margin trading can be stressful and anxiety-provoking.

Top 5 Margin Trading Platforms

1. AscendEX
2. Binance
3. Bybit
4. Huobi
5. Kraken