What is leveraged borrowing?
Leveraged borrowing (Margin Trading) is a financial tool that amplifies trading scale by borrowing funds. In cryptocurrency trading, users can borrow funds (such as USDT, BTC, etc.) from the platform through leveraged borrowing, allowing them to leverage a larger trading position with a smaller principal, thereby obtaining higher returns during market fluctuations. However, it is important to note that while leveraged trading amplifies profits, it also amplifies risks, potentially leading to larger losses.
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OKX is a well-established cryptocurrency trading platform that offers various financial derivatives services, including leveraged borrowing and contract trading. This article will detail how to activate the leveraged borrowing feature on OKX and provide a specific tutorial on how to use it.
Leveraged borrowing is an upgrade of leveraged trading, aimed at providing users with a more convenient and smooth leveraged trading experience, making leveraged trading simpler and more direct. Leveraged trading refers to traders borrowing digital currencies from exchanges and using the multiple of their margin to amplify potential profits or losses. Whether users engage in leveraged trading or not, they can learn how to borrow through leveraged borrowing to enrich their trading knowledge. Currently, leveraged borrowing can still be quite complicated. Next, I will introduce the specific steps for leveraged borrowing.
How to activate leveraged borrowing? Using the OKX platform leveraged borrowing tutorial
How to activate leveraged borrowing?
Leveraged borrowing can be quite cumbersome and requires users to be patient. Leveraged borrowing is a form of trading that increases the size of trading positions by borrowing additional funds. The following is a detailed tutorial on manual mode leveraged borrowing on the OKX exchange:
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Open OKX (official registration official download), select trading, click on contracts, and choose the cryptocurrency, such as BTC.
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In the trading interface, click the gear icon in the upper right corner of the page to see your settings. Then click the dropdown menu under "Isolated Margin Trading Settings" and select "One-Click Borrowing Mode." Choose the trading pair you want to trade using one-click borrowing.
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In the trading window below, you will see manual mode as the default option, along with buy or sell options. Before proceeding, select "Transfer."
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You can enter the amount to transfer from the fund account to the one-click borrowing account in "Transfer." This is the collateral you will provide for this trade. In this example, transfer 10,000 USDT and select "Confirm."
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In manual mode, you will next need to determine the amount of currency to borrow. Suppose you need 20,000 USDT to complete the trade and have transferred 10,000 USDT from the fund account. In this case, you will borrow 10,000 USDT and select "Confirm."
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Now you have 20,000 USDT available for trading. Suppose the BTC price is 20,000 USDT. Enter the USDT price and the quantity you want to buy, and select "Buy (Long) BTC."
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Suppose the BTC price has risen to 30,000 USDT. To close the long position, you can enter the price (USDT) and quantity (BTC), and select "Sell (Short) BTC" to sell BTC.
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Select "Confirm" for the order confirmation before placing the order.
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Your one-click borrowing account balance will show as 30,000 USDT.
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To completely close the position, you must repay the borrowed amount. Select "Borrow" and switch to "Repay." You can see the borrowed amount at the bottom of the page. Enter the amount to repay and select "Confirm."
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Before completing the transfer, the funds will remain in the one-click borrowing account. To transfer funds, select "Transfer," then choose "Withdraw." Available funds will be displayed at the bottom of the page. Enter the amount to transfer and then select "Confirm."
Can leveraged borrowing be used for short selling?
The borrowing operation in leveraged trading can be used for short selling. Short selling refers to the practice of borrowing a cryptocurrency when you expect its price to drop, selling it at the current price, and then buying it back at a lower price after the price drops, returning the borrowed coins and profiting from the difference.
Leveraged trading allows users to borrow funds to amplify trading scale, thus increasing potential profits or losses. In the case of short selling, users predict that the asset price will decline, so they borrow the asset and sell it immediately, expecting to buy it back at a lower price after the price drops, thereby making a profit after repaying the loan and interest. This high-sell-low-buy strategy is the basic principle of short selling.
If users predict that the price of Bitcoin will drop, they can borrow Bitcoin from the exchange and sell it immediately. If the price of Bitcoin does indeed drop, users can buy back Bitcoin at a lower price, repay the previous loan and interest, thus making a profit.
The risk of short selling is that if the market moves contrary to the prediction, meaning the asset price rises instead of falls, users may face losses. Additionally, when using leveraged trading, even small market fluctuations can lead to significant losses or profits due to the amplified trading scale. Therefore, while leveraged trading provides opportunities for short selling, it also comes with higher risks.
The above content is a tutorial answer to the question of how to borrow through leveraged borrowing. Leveraged borrowing allows users to achieve higher returns with a smaller principal. It is important to note that leveraged borrowing is a high-risk, high-reward trading method suitable for users with certain experience. Activating leveraged trading on OKX only requires a few simple steps, but in actual operation, it is necessary to pay attention to risk management and reasonably control the leverage multiple. Additionally, leveraged trading platforms have the right to freeze borrowers' accounts or conduct forced liquidations to protect the rights of the platform and other users. This may result in users losing trading privileges and being unable to perform any operations. Therefore, before engaging in leveraged borrowing, users must first understand the actual situation before making a judgment.