Margin trading allows you to add leverage to your positions to increase your potential earnings and profits. Hotcoin 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 Hotcoin Cross Margin Accounts 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 = Current total market value of all outstanding Margin Loans in the Cross Margin Account
Outstanding Interest = 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 that are exceeding 2X liabilities valuation to the other Wallet & Account;
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, a margin call will be triggered 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 liquidation. After the first notification, you will receive the notification every 24 natural hours.
When margin level ≤ 1.1, the liquidation engine will be triggered and all your 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.
2. Margin level of Isolated Margin
2.1 The net assets in the user‘s Hotcoin isolated margin account only can be used as the collateral in the corresponding account, and the assets in the user's other accounts couldn't be used 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)
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
There are 3x, 5x and 10x Isolated margins by position levers. When the loan reaches the range of the corresponding gear, the account is currently in this Tier, and the initial margin rate is the initial margin after full loan when the account is in the current leverage tier.
Margin Call Ratio，MCR: When ML ≤ MCR, a margin call will be triggered. The system will send notifications with an email, SMS, website reminder to notify users;
Liquidation Ratio,LR: 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. and the loan will be repaid to the next level in the order of interest first and then loan. If the risk rate is still less than or equal to the liquidation ratio of the next level, the liquidation process will be continued until the risk rate is greater than the Liquidation Ratio.
10x leverage on Isolated Trading pairs
Tier | Liquidation Risk Ratio | Margin Call Ratio | Initial Risk Ratio | Effective Multiple (leverage) |
1 | 1.050 | 1.090 | 1.111 | 10 |
2 | 1.061 | 1.101 | 1.127 | 8.90 |
3 | 1.072 | 1.112 | 1.142 | 8.04 |
4 | 1.083 | 1.123 | 1.157 | 7.35 |
5 | 1.094 | 1.134 | 1.173 | 6.79 |
6 | 1.106 | 1.146 | 1.188 | 6.31 |
7 | 1.117 | 1.157 | 1.204 | 5.91 |
8 | 1.128 | 1.168 | 1.219 | 5.56 |
9 | 1.139 | 1.179 | 1.235 | 5.26 |
10 | 1.150 | 1.190 | 1.250 | 5 |
5x leverage on Isolated Trading pairs
Tier | Liquidation Risk Ratio | Margin Call Ratio | Initial Risk Ratio | Effective Multiple (leverage) |
1 | 1.150 | 1.190 | 1.250 | 5 |
2 | 1.158 | 1.198 | 1.313 | 4.20 |
3 | 1.165 | 1.205 | 1.375 | 3.67 |
4 | 1.173 | 1.213 | 1.438 | 3.29 |
5 | 1.180 | 1.220 | 1.500 | 3 |
3x leverage on Isolated Trading pairs
Tier | Liquidation Risk Ratio | Margin Call Ratio | Initial Risk Ratio | Effective Multiple (leverage) |
1 | 1.180 | 1.220 | 1.5 | 3 |
2 | 1.1975 | 1.2375 | 1.875 | 2.14 |
3 | 1.215 | 1.255 | 2.25 | 1.8 |
4 | 1.2325 | 1.2725 | 2.625 | 1.61 |
5 | 1.25 | 1.29 | 3 | 1.5 |
3. Liquidation Clearance Fees
If your margin account goes bankrupt, When your Margin account or Crypto Loan order is being force liquidated, Hotcoin will charge a certain percentage in clearance fees as the Margin Insurance Fund, and the system will repay using the Margin Insurance Fund.
Products | Liquidation fee |
Cross Margin
| Cross Margin liquidated assets*2%
|
Isolated Margin
| Isolated Margin liquidated assets*clearance fee rate corresponding to Tiered Leverage
|
Note: The Clearance Fee rate corresponding to the Tiered Leverage = (the liquidation risk ratio of your tiered leverage during liquidation -1)*8% (the max. amount that can be charged without exceeding your remaining asset balance after liquidation).
Example: If the 5X leverages of a user is being liquidated and reduced positions to tiered 2 in BTC/USDT Tier 3, then the Clearance Fee rate = (1.165-1)*8% = 1.32%.
