What Is Binance Margin and How to Use It?
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What Is Binance Margin and How to Use It?

What Is Binance Margin and How to Use It?

Intermediate
Updated Sep 17, 2024
9m

Key takeaways

  • Binance Margin enables users to borrow funds against their holdings and utilize leverage, ultimately allowing for more capital-efficient trading. 

  • Margin trading supports leveraged long and short positions across a variety of digital assets on the spot market, thus allowing users to capitalize on both rising and falling markets.

  • Binance Margin offers different products to users, including Cross Margin, Isolated Margin, and Portfolio Margin. 

Introduction

Margin trading is a method of trading assets using borrowed funds. Traders can amplify trading results by accessing greater sums of capital to leverage their positions. Traders can realize greater profits on successful trades but also potentially realize more significant losses when the market moves against their position.

What Is Binance Margin?

Binance Margin enhances a trader's capital efficiency by allowing them to borrow funds to capitalize on market movements, whether rising or falling. Binance offers Cross Margin, Isolated Margin, and Portfolio Margin options, allowing users to trade according to their specific strategies.

Binance Margin Glossary

Margin Level 

Margin Level of Cross Margin Account = Total Asset Value of Cross Margin Account / (Total Liabilities + Outstanding Interest)

Your Margin Level is a key risk metric for your margin account. It determines whether you can trade normally, receive a margin call, or be liquidated.

Collateral Margin Level (for Cross Margin only)

Collateral Margin Level of Cross Margin Account = Collateral Value / (Total Liabilities + Outstanding Interest)

Your Collateral Margin Level will determine your maximum borrow amount, and the maximum amount you can transfer out of your Cross Margin wallet.

Collateral Ratio (for Cross Margin only) 

Depending on the amount of assets held in your Cross Margin wallet, certain margin assets may be valued on a discounted basis using a "Collateral Ratio," which is a percentage at which the asset is recognized as collateral. The Collateral Ratio is tiered and may change as the relevant margin asset amount in your Cross Margin account increases and/or decreases. The full collateral margin ratio list can be found on the Margin Data page. Read this FAQ for more information.

Interest 

Margin users need to pay interest on the funds they borrow. The system automatically accrues one hour's interest when you borrow funds. Subsequently, the system will accrue a new hour's interest each hour. Margin interest rates will change every hour based on current market conditions.

BNB Discount 

If you enable the BNB discount function, you can enjoy a 25% discount on margin trading fee and a 5% discount on Cross Margin interest fee. Make sure you have enough BNB balance in your Cross Margin account to use this feature.

Insurance Fund

The Margin Insurance Fund is designed to make up for losses incurred when the user’s Cross Margin or Isolated Margin account equity (asset minus liability) is less than 0, or when the user is unable to repay debts on Crypto Loan orders.

Index Price 

The Index Price is a bucket of prices from the major spot market exchanges, weighted by their relative volume. The Index Price is used to calculate some parameters like Margin Level, PNL, etc.

Cooling-off Period 

As part of Binance’s commitment to responsible trading, the Cooling-off Period function allows you to temporarily suspend both Cross and Isolated Margin borrowing for a specified time frame. You can set a Cooling-off Period of 1 day, 3 days, or 1 week, according to your needs. During this time, you won’t be able to borrow any cryptocurrencies using your Margin account.

Auto Top-up

Once you enable this function, when a margin call is triggered, the Auto Top-up function automatically transfers assets from your Spot Wallet to your Margin Wallet to top up the Margin account.

Margin Call

When your Margin Level drops below a certain threshold, you will receive a margin call notification. To reduce your chances of liquidation, you can reduce your position, repay your debts, or add more collateral. Different margin products have varying Margin Call ratios, which you can customize to your preferred level.

Liquidation

When the liquidation threshold is reached, a user’s margin position will be liquidated, and their collateral will be sold to repay any liabilities and interest owed. Each margin mode and leverage multiplier has a different liquidation margin level. Read this FAQ for more information. 

Difference Between Cross Margin and Isolated Margin 

Cross Margin mode

This strategy is particularly appealing for those who seek to maximize their capital utilization, as it enables the use of your entire margin balance across all your open positions, thus sharing risks and rewards across all open positions.

Isolated Margin mode

This strategy gives traders the flexibility to manage individual positions more granularly, as it separates margin balances for each open position, thus allowing you to control your risk exposure based on your unique risk appetite and trading strategy.

Cross Margin vs. Isolated Margin

Enables the use of the entire margin balance for all open positions, appealing to those who seek to maximize their capital utilization.

Risk is isolated, with a separate margin balance for each open position, allowing you to control your risk exposure based on your risk appetite and trading strategy.

Up to 5X leverage.

Up to 10X leverage.

Leverage is set at account level.

Leverage is set at pair level.

Dynamic interest rates.

Collateral ratios apply.

Collateral ratios do not apply.

Borrowing limits are tiered according to VIP Level.

Borrowing limits are tiered according to VIP Level, Tiers & Leverage selected.

Borrowed digital assets can be transferred out of Margin wallet.

Negative equity protection.

Cooling-off Period: Users can temporarily opt out of margin trading.

Getting Started With Binance Margin

  1. Log in to your Binance account.

  2. Go to [Margin] on the Trading page.

  3. Complete the Margin Quiz. 

  1. You can either manually transfer funds as collateral or use the auto-transfer feature to automatically move the collateral from the spot account when placing an order.

  2. If you are not able to open a margin account, please check if your country/region supports margin trading.

How to Borrow on Binance Margin

  1. Auto-borrow mode 

On [Margin Trade], select [Borrow] when placing an order, then the system will automatically borrow the amount needed for this order for you. For example, if you have 10 USDC available in the wallet and place an order of 30 USDC, the system will automatically borrow 20 USDC for you. 

  1. Manual borrow mode 

You can manually borrow the funds you need under the [Margin Wallet] page. Click on [Borrow], then choose the token and the amount you want to borrow, then click on [Confirm Borrow].

How to Repay on Binance Margin

  1. Auto-repay mode 

On [Margin Trade], select [Repay] when placing an order, then the system will automatically repay the amount filled for this order for you. For example, if you have 100 USDC debt, and you receive 50 USDC from an auto-repay sell order, the system will automatically repay 50 USDC for you. 

You can also choose to repay under the [Margin Position] tab.

Click on [Repay] next to the token you want to repay; the system will automatically help you repay the debt under this token with your available assets.

You can customize the assets to be sold and click on [Confirm]

  1. Manual Repay mode

You can manually repay the funds you want to repay under the [Margin Wallet] page. Click on [Repay], then choose the token and the amount you want to borrow, then click on [Confirm Repay].

Closing Thoughts

Binance Margin offers users various margin trading modes and multiple leverage options. Users can choose the products that suit them best to maximize the efficiency of their funds.

Further Reading

Disclaimer and Risk Warning: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind.  Digital assets are subject to high market risk and price volatility. The information provided does not constitute, in any way, a solicitation or recommendation or inducement to buy or sell the products. The value of your investment may go down or up, and you may not get back the amount invested. Comments and analysis do not constitute a commitment or guarantee on the part of Binance. You are solely responsible for your investment decisions and Binance is not liable for any losses you may incur. Past performance is not a reliable predictor of future performance. You should only invest in products you are familiar with and where you understand the risks. You should carefully consider your investment experience, financial situation, investment objectives and risk tolerance and consult an independent financial adviser prior to making any investment. This material should not be construed as financial advice. This product may not be available in certain countries and to certain users. This content is not intended for users/countries to which prohibitions/restrictions apply. For more information, see our Terms of Use and Risk Warning. To learn more about how to protect yourself, visit our Responsible Trading page.