You may have already learned about margin trading and how it uses borrowed funds from exchanges (like Huobi Global) as leverage to provide traders with new, profitable trading strategies. If so, you’d also be aware of the significant risk that comes with margin trading.
Read the following lessons for more beginner trading knowledge:
Opening margin trading positions
Keep this basic idea in mind – if you expect the price of a token to increase, buy long. And if you expect the price to decrease, sell short. So let’s go through the process of how to buy and sell in margin trading on Huobi Global:
1. Tap ‘Trade’ on the main page of the Huobi Global app.
2. Choose either cross margin or isolated margin contracts. Not sure what the difference is? Read this lesson before proceeding.
3. Choose the trading pair you want to long or short – use the search function or browse the different pairs by clicking on USDT, HUSD or BTC. For this example, we’ll use a BTC/USDT trading pair in cross margin trading.
4. Transfer balances from your other accounts if you don’t have enough. To do so, tap ‘Transfer’ and follow the steps.
5. Now that you’ve deposited the initial collateral, you can borrow against it. You can click on ‘loan’ and borrow the margin amount you need. All cross margin contracts allow a maximum margin ratio of 3:1, which is indicated by the 3x logo seen in the previous step. For example, if your account’s available amount is 101 USDT, the maximum margin amount would 202 USDT, which will give you a total of 303 USDT. Note that longing requires USDT and shorting requires BTC tokens.
6. Once you have the desired amount, you can use different orders to buy long and sell short. You can use the same logic you would use in spot trading. However, remember that trading with a margin is a lot riskier as you are trading with borrowed money and can lose all your balances.
7. Make sure to keep an eye on the risk rate. Once it reaches ≤110%, the exchange will force your account into liquidation to repay the interest and borrowed tokens. You can find your risk rate and metrics related to margin trading by tapping on Loan/Repay.
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