Many exchanges connected to Mudrex allows users to do leveraged trading on all asset by the use of Margin.
Margin is essentially the collateral amount you need to put that cover your losses. If you are on 10x leverage then you only need to put in ~10% of the trading amount. As a consequence, if the loss on the trade exceeds the collateral amount the entire amount is lost. This is known as liquidation.
For all exchanges that are supported on Mudrex, the Margin method used is 'Cross Margin'. When on cross-margin, the amount available in your account is entirely available as collateral. This typically is a safer way to trade and reduces the liquidation prices. However, a drawback of this is that on liquidation the entire account amount gets wiped off.
Mudrex uses this 'Cross Margin' facility of the exchanges to provides users the ability to set different leverages for different strategies. Users can even set different leverage amounts!
Mudrex uses this Leverage amount and multiplies it with the contract amount the user wanted to start with to set the appropriate.
For example, XBTUSD price is 9000, and a user that had 0.5 BTC in their account started a strategy with 0.1 BTC and leverage of 1.8x. A buy signal now comes. Mudrex will
- Check if your account is set to 'Cross Margin'
- If not, we will set the account to 'Cross'
- We will calculate the number of contracts to be purchased as Margin Amount*leverage*Price = 0.1*1.8*9000 = 1620 contracts
- We place an order of 1620 contracts on the account.
Note: Trading with leverage is risky and can lead to large unintended losses. We have restricted users' ability to choose leverage by adding limiting the upper value of leverage to 10x. Use leverage carefully and only if you know what you are doing.
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