BitMax cryptocurrency exchange launches margin trading

Cryptocurrency exchange, BitMax.io, has announced that it has completed public testing and officially launched margin trading. Margin trading on BitMax.io is a financial derivative trading service offered by the platform.

BitMax.io users can leverage their tradable asset for a potentially higher return on investment. However, they must also understand and bear the risk of potential losses from margin trading. The crypto pairs that can be traded on margin are BTC/USDT, ETH/USDT, ETH/BTC, XRP/USDT, XRP/BTC, and XRP/ETH.

To better protect the fund of clients, BitMax.io margin trading requires a separate “Margin Account.” Users must transfer their assets from Cash Account to Margin Account as collateral for margin loan before starting margin trading.

Upon transfer, users do not need to request for a margin loan. The system will automatically apply the maximum leverage based on their “Margin Asset” balance. To keep users well updated of their asset status, interests of margin loan are calculated and updated on the user’s account page every 8 hours. BitMax.io allows users to repay the loans by either transacting the assets from the Margin Account or transferring more assets from the Cash Account.

In order to mitigate price deviation due to market volatility, BitMax.io uses composite reference price for the calculation of margin requirement and forced liquidation. The reference price is computed by taking an average last trade price from five exchanges (if available at the time of computation) – BitMax.io, Binance, Huobi, OKEx and Polonium and removing the highest and lowest price. Users are allowed up to 48 hours to take action for loan repayment.

Typical Use Case

Take an example of BTC/USDT with 10th leverage.

On the other hand, what if you expect that BTC price would drop from 20,000 USDT to 10,000 USDT?