Trading with more money than you have available leveraged by Binance

By douglas_cachazo | Binance_Doug | 20 Jun 2022

Binance Margin trading, consists in trading leveraged with more capital than you have available, this capital is provided by the Binance platform as a loan, so you can trade with more capital than you have available. The idea is to maximize profits. Invest your profits and quickly pay back the amount borrowed.

For example, if I have 100 BUSD I can buy BTC investing 300 BUSD or if I choose more leverage, ten times more 3000 BUSD, but the available leverage depends on the selected pair,

Binance lends you with interest calculated by hours, the idea is that you can operate with more capital, get the most profit and as soon as possible to return the loaned capital, otherwise if you keep the loan will continue to charge interest, this is one of the first actions you must take to protect your assets, in the next section I will show certain recommendations and guide you how to operate the trading margin.

First of all you must have an account in Binance, if you still don't have one then I leave you my referral link for you to register, with the registration using my link you will have benefits and promotions that binance gives to new users, such as a percentage discount on commissions on transactions.

https://accounts.binance.com/es-LA/register?ref=299806356

If you want to register at once then I leave the link to my guide to register step by step, then in the same guide I explain how to verify your account and finally simple explanation for you to acquire your first cryptocurrency in Binance

https://www.publish0x.com/binance-doug/step-bystep-guide-to-registering-on-binance-xzgyglm

Continuing with the topic at hand, but before I must warn you that margin trading is a risky investment, if you are a beginner I recommend you to document yourself more, do traditional trading, learn and once ready do not hesitate to use margin trading to increase your profits,

Basically the process to operate in margin trading is as follows:

- Select which account to work with, cross or single margin.

- Make a transfer of the currency in which we will trade to the selected account, either cross margin or single margin account.

- Borrow the amount to trade with a larger amount than the available one.

- Operate the trade

- Finally pay the amount borrowed

These are the steps to follow when you operate with margin trading, now before going into detail on how to operate, let's make a parenthesis to clarify certain terms and make some recommendation. let's go to the margin account

https://www.binance.com/en/my/wallet/account/margin

It is appropriate to clarify some concepts

Cross

When opening a trade it takes into account the entire amount of the margin wallet, it will take the amount of all the currencies you have in the margin account as collateral to cover the risk of orders at risk of liquidation.

Isolated

This modality allows the management of the risks according to the maximum amount that would be lost in case of liquidation, placing the margin for that open position, in isolated it will only take the amounts that you have according to the pair used, plus the leverage.

Other concepts that you must have clear

Trading long with Margin

"Long is when you buy at a low price and then sell at a higher price. In this way, you can make a profit when the price rises.

Trading short with Margin

"Short" is when you sell at a maximum price and then buy lower. In this way, you can profit when the price goes down.

The PNL is an indicator that measures the profit or loss, you must monitor, if it is in green you are in profit, red the opposite.

Margin level

The margin level is the relationship between a trader's funds and the margin. The margin level shows the current risks, LTV indicates the risk of your operation. If the collateral currency loses value the LTV goes up which indicates that my risk goes up, if my collateral goes up in value it decreases the risk allowing it to decrease.

LTV = Loan amount / Collateral amount x 100%.

If your LTV is higher than the estimated margin, you must add more collateral or pay off the loan, if your LTV is higher than the liquidation LTV, your collateral will be liquidated to pay off your loan.

Margin level of cross margin

Margin level of a cross margin account = total asset value of the cross margin account/(total liabilities + outstanding interest), where:

Margin level of the isolated margin

Margin level of the isolated account = total value of assets in the isolated account/(total value of liabilities + unpaid interest)

Settlement fees

You should avoid forced liquidations, because if this happens you will have to pay liquidation fees, and the margin insurance fund will charge a percentage of liquidation clearing fees.

Last March 21 of the current year concerning the reduction of interest rates for the following cryptocurrencies: BTC, ETH, BUSD and USDT.

New tiered interest rates for BTC, ETH, BUSD and USDT on Binance Margin:

Let's see how margin trading works in Binance,

Earlier we mentioned how to enter the margin wallet, now let's get into margin trading.

https://www.binance.com/es-LA/trade/BTC_USDT?theme=dark&type=cross

The first thing to do is to select the currency to put in guarantee and the currency to buy, that is to say the pair, in this case I will select the pair Btc/Busd, generally I operate as the Busd currency which is the stable currency of the Binance platform, known as stable coin, its value is always paired with the dollar, that is to say

1 BUSD is always equal to 1 Dollar.

In Binance you have more than 1500 pairs to trade and around 370 cryptocurrencies

Now we need to transfer to the cross margin account the amount of Busd I need to put up as collateral.

I already have the effective loan. It is no longer the 30 dollars in Busd, but 90 dollars in Busd automatically since I am in cross margin and the leverage of 3x is assumed, what remains is to make the trade using the 90 dollars in busd to buy the corresponding fraction of BTC, if the market plays in my favor and it is expected I hope to raise the BTC to sell them and thus opens obtained a profit, then and very important to select the option to pay and thus the debit balance will remain at zero, if not every hour will be deducted a percentage of commission.

In this example my intention was to buy BTC, but the market was not in my favor, by selecting to pay I will be repaying the amount borrowed.,

It is a very easy and uncomplicated process, very similar to trading on isolated margin.

To finish this part I must mention something important as it is the margin cooling period, which is to temporarily suspend the margin process when conditions are not in your favor, it is a mechanism available in Binance to protect you.

How to select the cooling off period

The cooling off period is the temporary suspension of the margin when conditions are not favorable. Loans will be suspended for the duration of the cooling off period.

I want to make it clear that I am not a financial advisor, the intention is to serve as a guide and let you know this important tool available on the Binance platform,

If you are a beginner user, I recommend you to stay away from this type of investments for the moment. Now if you are already familiar with cryptocurrency trading, you know and have clear risks, and you know the right time to invest, this tool will be very helpful to get good profits hand in hand with Binance, invest with this tool and you will see your profits go up compared to traditional trading.

If you are not very familiar with trading, read well in the Binance academy, get documented, get started with traditional trading and then you will be ready.

Here is the link to the Binance academy.

https://academy.binance.com/en

Trading with Binance, the leading exchange, is definitely the best option, both for security, ease of trading, liquidity of the exchange (the best in the market), another factor is the low commissions and very special that offer just announced, New tiered interest rates, reduced for BTC, ETH, BUSD and USDT assets.

I find it very useful to use Binance margin trading for two very valid reasons:

I can increase my profits as I enter the market with larger positions by investing more than what is available, definitely the leverage helps you with that.
It opens a very clear possibility to diversify my portfolio, since with a larger fund I can open more positions fragmenting the amount to invest and place more orders so that I can always cover the risks.
As I mentioned, it allows a period of reflection.
It has an insurance fund for users' accounts when they cannot pay what is owed due to lack of funds or when their capital is less than 0.