How to start Margin Trading？
To use "Margin Trading", users need to create a "margin account" first.
What is a margin account?
A margin account is a special account set up by Bibox for financial derivatives transactions to safeguard investors' fund security. In order to use financial derivatives transaction services provided by Bibox, investors need to create a "margin account" and transfer funds from their master account to their margin account. Funds in this margin account will be used when investors conduct Margin Tradings or other financial derivatives transactions. The investor's master account will not be used for these transactions (the master account is used to top up and withdraw money).
What is Leverage?
Margin is often referred as "leverage" by investors. "Leverage" enlarges the tradable amount of investors, and at the same time increases the investors’ returns as well as risks.
What is the leverage ratio offered by Bibox?
Bibox offers three times leverage to investors. For example, the net asset in your margin account is 10BTC. You can borrow 20BTC from the market, making your total assets 30BTC. All of 30BTC can be used for transactions.
Borrowing and lending
The borrower can repay the loan ahead of schedule, while the lender users cannot recall the loan in advance.When a deal can be made but the rate set by the borrower is different from the rate set by the lender, the borrower’s rate shall apply.
Borrowing time period
The time period for each loan is 7 days.For borrowers who have overdue repayment, the system will borrow a new sum of money at the optimal rate from the market to repay the last loan and its commission fee. Interest on the new borrowing will accrue anew. Both accrual interest on the borrowing and repayment are settled by transaction. For each borrowing, users can choose to repay all or part of the loan at any time. When making partial repayment, commission charges shall be repaid first.
How to calculate interest?
Bibox.com takes 24 hours as a day (less than 24 hours counted as one day) and interest is accrued once per day. This simple interest only calculates the interest charged on the principle. Interest Formula：Interest = principle * interest rate * time
What is forced liquidation?
At Bibox.com the users shall pay a certain proportion of margin for each loan. In case of adverse changes in the market, for example, when a reverse occurs in the market, and the total assets in the margin account shrink to a certain extent (Total Margin / (Total Loan + Interest)*100%) ≤110%,，the system will force selling the user’s assets via current settlement pricein the form of market orders or buying liquidation borrowing and commission. There is risk (which is of small probability) of liquidation failure, which means that after forced liquidation there is not enough money to pay off the loan. On such occasion, the losses shall be borne by the lender. Lenders can choose to buy insurance against the risk.
Price Index: The current price index of bibox is weighted according to price information from five digital assets exchange platforms of CoinMarketCap、CoinCap、Binance、Bitfinex and Bibox.
Estimated FOB Price/ Forced Liquidation Price: The price is based on the assets and loans of your current credit account. It is for reference only. The actual result is subject to the final execution of the system.
Current Settlement Price/ Latest Price: Bibox platform price.
What is insurance? Is it mandatory?
Lenders can choose to buy insurance. If a lenders has bought the insurance and forced liquidation has failed (which is of small probability), the investor protection fund will reimburse the lender for the losses, until the fund is used up. The lenders who have not bought the insurance shall bear the losses on their own. The investor protection fund is composed of 10% of the commission incomes from the purchasers.
Bibox.com has no legal liability for any risks in forced liquidation due to reasons including not being able to access the network resulting from network failure. In order to maintain the stability of the MarginTrading market, we may temporarily suspend new MarginTradings at any time according to the market fluctuations and risk control system, but borrowing and lending that has been completed will not be affected.
Check out more rules on credit transactions here: