KuCoin Margin Trading Tutorial

❓What is Margin trading?

🙋‍♀️Margin trading refers to a trade mode in which users borrow a certain amount of digital tokens by pledging digital tokens on KuCoin to conduct a long (buy) / short (sell) operation, so as to leverage large funds with a small starting amount to earn more profit.

❓How to use Margin trading to amplify profit?

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❓Does KuCoin support Cross Margin or Isolated Margin？

🙋‍♀️KuCoin Margin adopts the Cross Margin model, which means that all assets (regardless of currency) in the Margin account will be used as principal to avoid forced liquidation. The advantage of this model is that there is no need to be forced to exchange the tokens currently held in order to borrow other currencies, and users can consider the entire Cross Margin account as a position that will only have one Debt Ratio. As long as the Debt Ratio is moderate, the risk of liquidation is very low.

❓How much leverage does KuCoin support?

🙋‍♀️10X

If you hold 1 USDT on KuCoin, you can borrow up to 9 USDT, meaning you have 10 USDT available for Margin trading. 

For newbies, to control the debt ratio, it is recommended that the leverage should be kept below 5X leverage.

❓What’s the difference between Margin trading and Futures trading?

❓What is the Debt Ratio?

🙋‍♀️If the user does not borrow any digital assets, the Debt Ratio is 0%. When the   user borrows a number of digital assets, the system will calculate the Debt Ratio based on the user's principal, borrowed assets, and interest. The calculation is as follows:

Debt Ratio = Account liabilities/Account assets

Account liabilities = Borrowed assets + Accrued interest = sum (whole borrowed assets*mark price) + sum (Accrued interest for all borrowed assets*mark price)

Account assets = sum (whole holding assets*mark price)

The Debt Ratio will be refreshed every 5 seconds. When the user's Debt Ratio reaches 95%, the user's account will trigger a warning and KuCoin will send an SMS and email warning to the user based on their security settings. Forced liquidation will be triggered when the Debt Ratio reaches 97%. You may obtain the current Debt Ratio data on the Margin account page and Margin trading page no matter whether you are visiting our website or app.

❓After successfully borrowing assets, how is the interest calculated?

🙋‍♀️The interest will be charged for the first time once you borrow funds successfully. The accrued interest is updated every hour and will be settled when the borrowers repay. It will be calculated at the actual time of your borrowing.

❓When the debt is due and the borrower fails to repay the debt in time, how will the debt be handled?

🙋‍♀️The system will automatically use the corresponding assets in the borrower's Margin account to repay the loan if the borrower does not repay when the loan is about to expire. The system will automatically borrow the corresponding assets to repay the loan if there are insufficient or no corresponding assets in the borrower's account, which means to lend the same amount with a new loan to repay the old loan.