Whenever you want to trade on margin, first make sure that funds are located in your Margin Wallet.
To open a short position:
- Go to the Trading.
- Select the desired pair to open your short (Under Margin tab, not Exchange)
- Set up a Margin Sell order (specify the amount, order type, price).
- Place an order by pressing Margin Sell (Margin Funding will automatically be taken care of by the system through our P2P Margin Funding platform).
- When you want to close the position, either set up a Market Margin Buy order to close the short, or place a Limit Margin Buy order, of the same amount of ETH as your short.
- When the order is completely filled, the short will close, borrowed funds are repaid and profit/losses will be credited to your trading wallet.
To open a leveraged long position, follow the steps above but instead open the position with a buy order and close the position with a sell order.
Initial equity on Ethfinex is 30%. This means that the USD value of the funds you hold in your Margin Wallet needs to be at least 30% of the USD value of the position you wish to open.
if you have 1000 USD in your margin wallet. Those 1000 USD will serve as collateral for opening margin poisons up to 3.33:1. IE a margin position with a USD value up to 3333.33 USD.
If you wish to use 2x leverage only, the size of your position should only be worth 2000 USD.
When holding 1000 USD, your tradable balance will be 1000 * (1 / 0.3) = 3333.33 USD
Let say you open a long position of 13.333 @ 250, but the price starts dropping.
When the net value of your balance reaches 15% of the initial value of the margin position, you will get margin called.
The position was worth 13.333 * 250 = 3333.33 USD
30 % of that is 1000 USD (this is your initial equity)
15 % of that is 500 USD (this is the maintenance equity)
Your current balance is 1000 USD. When the loss on the position is 1000 - 500 = 500 USD, the net value of your margin trading balance will be 15 % (500 USD) and you will be margin called. Your position will be closed automatically at market price.
This will happen when your position is worth 3333.33 - 500 = 2833.33 USD.
Calculating the liquidation price
To calculate the liquidation price, we need to know the price to sell the ETH at to end up with that amount: 2833.33 / 13.33 = 212.50 USD per ETH
The margin call price will be around 212.50 USD. This can vary a bit, due to interest payments and fees, but 212.50 will act as an accurate indication.
Note that when you are margin trading you will be borrowing funds and interest rates will be charged
The rate is determined by our P2P margin funding platform and depends on offer and demand. To get the current rate you could look at the offers in the Funding page. When you open a margin position (long or short) the required liquidity will automatically be borrowed at the best available rate.
The system takes the best offer available, i.e the lowest offer available. A margin trader can input some conditions for the required margin funding and these conditions are taken into account when matching.
Period is not relevant for matching the margin trader's demand to available offers. When a margin funding contract used in an active margin position expires, the system automatically renews the margin funding demand again to the best available offer(s).