🥷As most of you guys have heard of margin Trading but 95 percent of you havnt used it yet as you havnt yet understood it completely. Here, our professional team has made a brief article to make you understand this concept with easy examples.

📝In margin account, you can borrow upto 2 times of your own fund value in margin account. First of all, you should always borrow in btc terms instead of any other Altcoin. Because btc borrowing interest rate is too low (3.65 % p.a). Bnb borrowing rate is 109.50% p.a.

Now it doesn't matter what you're buying at what rate (It does matter but only for margin level risk calculation, I'll come to that point later).

They will charge you for the amount you borrow. You can borrow upto 2 times of your fund value in your binance margin account. If you have 5 btc in your account, you can borrow 10 more btc from that account at hourly interest rate of 0.00041667 % (monthly interest 0.3%).

Total interest for that 10 btc for one month would be 0.03 btc. So after one month you have to pay back 10.03 btc. You just have to keep that 5 btc spare in your margin account because your borrowing was made on that basis only. You can do whatever you want with that fund. Buy bnb, MATIC, link, eth or any other margin Trading pair you like.

Now coming to margin level risk calculation:-

📌Margin Level = Total Asset Value / (Total Borrowed + Total Accrued Interest)

✅On day one, you have 5 own btc. 10 btc borrowed. Your margin level risk on day one = (10+5)/10 which comes at 1.5 times which is moderate risk.

Now if you want to make full use of borrowed capital and you're bullish on a particular Altcoin for example BNB. you bought bnb at 18k with full 15 btc capital (5 own + 10 borrowed). 15 btc at 18k price would be 8,333 BNB.

📝After one month scenarios

🙋‍♂️Scenario 1 :- After 1 month if bnb price is 20k, your total fund would be 16.66 btc. From 16.66 btc, 10.03 btc are borrowed (0.3 btc Interest as calculated above) and rest 6.63 are your own.

Margin level = 16.66/10.03

= 1.66 times Which means lesser risk.

🙋‍♂️Scenario 2 :- On the contrary if after one month bnb price is 15k, then total fund 12.5 btc.

Out of 12.5, borrowed are 10.03 and your own just 2.47.

Margin level = 12.5/10.03  =  1.25 times means higher risk level.

If your margin level drops to 1.3, you will receive a Margin Call, which is a reminder that you should either increase your collateral (by depositing more funds) or reduce your loan (by repaying what you’ve borrowed).

If your margin level drops to 1.1, your assets will be automatically liquidated, meaning that Binance will sell your funds at market price to repay the loan.

Have a safe trading ⚠️