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Spot & Margin Trading
Margin Trading
Binance Margin Level and Margin Call
Binance
2019-07-05 11:08
Margin trading allows you to add leverage to your positions in order to increase your potential earnings and profits. Binance uses the margin level to evaluate the risk level of your margin account.
1. Margin level of Cross Margin
1.1 Users participating in Margin Loans may use the net assets in their Cross Margin Accounts in Binance as the Collateral, and the digital assets in any other accounts are not included in the Margin for cross margin trading.
1.2 The Margin Level of a Cross Margin Account = Total Asset Value of a Cross Margin Account/(Total Liabilities + Outstanding Interest), where:
Total Asset Value of a Cross Margin Account = current total market value of all digital assets in the Cross Margin Account
Total Liabilities = the current total market value of all outstanding Margin Loans in the Cross Margin Account
Outstanding Interest = the amount of each Margin Loan * the number of hours as loan time by the time of calculation * hourly interest rate - deduction/paid interest.
1.3 Margin level and related operation
  • Leverage 3x
When your margin level>2, you can trade and borrow, and transfer assets to the exchange wallet;
When 1.5<margin level≤2, you can trade and borrow, but you can’t transfer funds out of your margin account;
When 1.3<margin level≤1.5, you can trade, but you can’t borrow, neither transfer funds out of your margin account;
When 1.1<margin level≤1.3, our system will trigger a margin call and you will receive a notification through mail, SMS and website to inform you to add more collateral (transfer in more collateral assets) to avoid the liquidation. After the first notification, the user will receive the notification per 24 natural hours.
When margin level≤1.1, our system will trigger the liquidation engine and all assets will be liquidated to pay back the interest and loan. The system will send you a notification through mail, SMS and website to inform you that.
  • Leverage 5x (only supported in the master account)
When your margin level>2, you can trade and borrow, and transfer assets to the spot wallet;
When 1.25<margin level≤2, you can trade and borrow, but you can’t transfer funds from your margin account to your exchange wallet;
When 1.15<margin level≤1.25, you can trade, but you can’t borrow, neither transfer funds from your margin account to your exchange wallet;
When 1.05<margin level≤1.15, our system will trigger a margin call and you will receive a notification through mail, SMS and website to inform you to add more collateral (transfer in more collateral assets) to avoid the liquidation. After the first notification, the user will receive the notification per 24 natural hours.
When margin level≤1.05, our system will trigger the liquidation engine and all assets will be liquidated to pay back the interest and loan. The system will send you a notification through mail, SMS and website to inform you that.
1.4 For more information, please refer to the Cross Margin Trading Rules article.
2. Margin level of Isolate Margin
2.1 The net assets in the user‘s isolate margin account only can be used as the collateral in the corresponding account, and the assets in the user's other accounts(cross margin account or other isolated accounts) couldn't be calculated as collateral for it.
2.2 The margin level of the isolated account = the total value of assets under the isolated account / (total value of liabilities + unpaid interest)
Among them, the total value of assets = the total value of the underlying assets + nominal assets in the current isolated account
Total liabilities = The total value of the assets that have been borrowed but not returned in the current isolated account
Unrepaid interest = (the amount of each loaned asset * the time length of the loan * hourly interest rate)- repaid interest
2.3 Margin level and Operation
When the Margin Level (hereinafter referred to as ML)> 2, users can trade, can borrow, and the excess assets in the account can also be transferred to other trading accounts. But the ML still needs to equal or greater than 2 after transferring out to ensure normal asset transferring out functions.
  • Initial Ratio (IR)
IR is the initial risk rate after the user borrows, and there are different IRs according to different leverage. For example, the IR will be 1.5 under the 3x leverage with full borrowing, the IR will be 1.25 under 5x leverage with full borrowing and the IR will be 1.11 under 10X leverage with full borrwing.
  • Margin Call Ratio ( MCR )
When MCR <ML ≤ 2, users can trade and borrow, but cannot transfer assets out
The MCR will be different according to different leverage. For example, the MCR for a 3x leverage is 1.35, for 5x leverage, it will be 1.18 and for 10x, it will be 1.09.
  • Liquidation Ratio (LR )
When LR <ML ≤ MCR, a margin call will be triggered. The system will send notifications with an email, SMS, website reminder, suggesting the user add a margin (that is, transfer more collateral funds) to avoid the risk of liquidation. After the first notice, the notifications will be sent every 24 hours. If ML≥MCR later, the user will not receive next notification
When ML ≤ LR, the system will execute the liquidation process. The assets held in the account will be forced to sell to repay the loan. At the same time, users will be notified via email, SMS, and website reminder.
LR will vary according to different leverages. For example, the LR for 3x leverage is 1.18, for 5x leverage, it is1.15 while for 10x leverage, it is 1.05.
2.4 For more information, please refer to the Isolated Margin Trading Rules article.
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