Trade Margin on Binance while protecting your Assets Fully
Binance Margin’s Interest Rate Reduction
Binance Margin has launched an Interest rate reduction promotion for BTC, ETH, BUSD and USDT. The promotion period begins from 2022–03–21 11:00 AM till further notice. During this promotion period, users are given the opportunity to enjoy discounted annual interest rates that are as low as 0.8% with the assets listed earlier. Visit here to see in full details the new tiered interest rates for BTC, ETH, BUSD and USDT on Binance Margin.
The interest rates differ depending on the VIP levels of users, margin pairs and other factors.
Kindly refer to Margin Data for a list of the most updated marginable assets and more information on rates and specific limits.
Advice for protecting your asset when trading margin
Trading involves a lot of risk taking, the trading itself is one as you have to carefully decide when to sell or buy, but above all is the safety of your assets, with Binance for funds and assets are fully secured from unwarranted losses and scams. Not only that, Binance has proven over time to be trustworthy and I can assure you that Binance is worthy of your trust. Your accounts are fully protected and you get access to amazing offers. The security on Binance is top notch and you can bank on it.
Monitor your lending risk, with a good knowledge of Loan-to-value (LTV), you can measure in ratio and evaluate your lending risk. The ratio allows you to measure notional value of a loan against the collateral’s market value. In essence, a high LTV ratio depicts a high financial risk and vice versa.
How to Calculate LTV?
LTV = Loan Amount / Collateral Amount x 100%
*Loan Amount = Principal + Interests
Example: 1 BTC is equivalent to 7,400 USD on 2020/03/12 9:00 AM UTC, thus 0.01938571 BTC equals to 143.45 USDT
LTV (%) = 100 USDT / 0.01938571 BTC x 100%
= 100 USDT / 143.45 USDT x 100%
= 69.71%
Binance uses the LTV ratio to evaluate the risk level of your cross collaterals. Your collateralized assets will face liquidation if the LTV ratio reaches a certain threshold. If there are still assets remaining after the liquidation, they will be returned to your Spot Wallet in the original asset.
When the LTV ratio reaches the Margin Call level, you will receive a margin call notification via email, inmail, and SMS, prompting you to add collateral to reduce the risk of liquidation. When the LTV ratio reaches the Liquidation Call level, it triggers a forced liquidation on your collateralized assets. After this, a liquidation call notification via email, inmail, and SMS will be sent out to notify you.
Upon liquidation, a liquidation fee will be imposed, this fee is calculated based on 1% of the loan amount. Please note that the liquidation fee on collateral here is different from the liquidation fee of your position in futures. During extreme price movements, you might be charged both liquidation fees on collaterals and your futures position at the same time. You can always adjust the LTV ratio to avoid the liquidation of collaterals, click here to learn more.
Use Cross Margin or Isolated Margin with full understanding to protect your asset when trading margin. Here the net assets in the user’s isolated margin account can only be used as the collateral in the corresponding account, and the assets in the user’s other account (cross margin account or other isolated account) cannot be used as collateral for it.
• 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
Kindly refer to isolated margin trading rules for more information.
Why is Binance Margin good for you?
- Diverse trading pairs
Margin trading offers access to exotic trading pairs. This involves two cryptocurrencies paired together (e.g., BTC and ETH). So instead of buying or selling the currencies themselves, the trader is speculating on the relative performance of the two. With Binance, traders can trade pairs with leverage of up to 10X. remember that the more volatile an asset’s price is, the less reliable it is to bet on, thereby causing fewer trades to be established in that market.
- Multi-asset collateral
Peculiar to margin trading is the ability for users to invest multiple assets as collateral to borrow leverage. On Binance, this can be done in the cross margin mode. So instead of investing BTC only into a BTC-based margin trade, investors are can use their BTC and ETH, or BUSD, USDT, and other digital assets to dominate their collateral. Investing multiple assets as collateral allows traders to operate with more flexibility when opening trades.
- Cooling-off period. Making good use of the cooling-off period
In a bid to encourage responsible trading, Binance has successfully launched and initiated the cooling off period for margin trading. With the cooling-off trading period you are allowed to temporarily suspend all margin trading activities for a specified period. Cooling off periods can be set at 1 day, 3 days, or a week as your needs require. Cryptocurrencies cannot be borrowed or used during the cooling-off period.
Traders can adopt the use of this feature to limit and control their trading activities especially in trying situation which includes losses and pressures.
As discussed earlier it helps traders to trade responsibly.
- Insurance fund
Losses can have devastating consequences which is why Binance has a system that protects traders from bankruptcy. Binance insurance funds are safety nets that protects bankrupt traders from adverse losses and ensure the profits of winning traders are paid out in full. The insurance fund is primarily put in place to limit the occurrences of counterparty liquidations. Positions of opposing traders are automatically liquidated to cover for a bankrupt trader’s position. Insurance funds are used to solve problems by using the collateral from fees of non-bankrupt users to cover losses of bankrupt users (negative balance accounts).
In the majority of these cases, Binance will use the Insurance Fund to take over the positions and offload them onto the market gradually. The Insurance Fund will collect liquidation fees from users that do not result in bankruptcy. If the insurance fund is unable to accept positions from the liquidations, counterparty-liquidation will occur. Click here to know about Binance Insurance Funds.
Finally, Margin trading can serve as an eye opener to traders on opportunities unavailable in other forms of trade. When margins are traded with purpose and attention, it can become a fun and profitable activity all together. Also traders must understand the risks involved in margin trading. Important tools like stop-orders should be used wherever and whenever possible. All these are possible while trading on Binance. Click here to create a free Binance account and enjoy promotion offers while trading margin with Binance.
Open a free Binance account here to enjoy unlimited benefits from Binance while trading.
Till next time, let me know how you feel in the comment section, your questions are welcome too.
Happy Trading 😊
references…
