How to start Margin Trading？
To use "MarginTrading", users need to open a "margin account" first.
What is a margin account?
A margin account is a special account for financial derivatives transactions. It’s set up by Bibox to safeguard the investors' fund security. In order to use financial derivatives transaction services provided by Bibox, investors need to open a "margin account" and transfer funds from master account to margin account. Funds in this margin account will be used when investors conduct MarginTradings or other financial derivatives transactions. Meanwhile the investor's master account will not be employed (the master account is used to top up and withdraw money).
What is a Leverage?
Margin system is a common financial transaction system. It is often called "leverage" by investors. "Leverage" enlarges the tradable amount of investors, at the same time increases investors’ returns as well as risks.
What is the leverage ratio offered by Bibox?
Bibox offers three times leverage for 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 transaction.
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 that by the lender, the borrower’s rate shall prevail.
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. 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 are counted as one day) and interest is accrued once per day.so it is a simple interest that only calculate the interest charge on 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: