Coinmetro Margin platform guidelines
You may already be familiar with exchange trading that is available on most crypto exchanges, including CoinMetro.
When an exchange order is ﬁlled, you exchange a specific quantity of one asset with a quantity of another asset, and your wallet balances for the two assets update immediately. Margin trading works differently.
On the Margin platform, you place an order to buy or sell a particular asset against another (as with exchange trading), but when the order is ﬁlled your wallet balances do not update. Instead, an open position is created which has a ﬂoating proﬁt or loss (P/L) that automatically updates as market prices change. When the position is closed sometime later, the P/L is converted to a settlement currency, which is the primary collateral you choose.
The main differences between the two types of trading can be summarised as
In summary, margin trading provides the most ﬂexibility if your main goal is to generate proﬁts. If you instead want to purchase cryptos for long-term holding and/or their utility, then exchange trading would be more suitable.
What are the prerequisites for margin trading?
To trade on margin with CoinMetro you must complete the following steps:
1. Open an account with CoinMetro
2. Complete KYC (Know-Your-Customer)
3. Fund your account
4. Allocate some or all of your funds as collateral. This can be done in the Collateral
panel on the Margin platform where you will see the button "Add collateral to start".
What is collateral?
Before you can place your ﬁrst margin trade you need to allocate some funds as collateral. These funds act as security for the loans you automatically receive when making trades.
Funds allocated as collateral are locked and cannot be withdrawn or used for any other purpose.
You may release funds from collateral if you have sufﬁcient free margin.
Currently, you are able to add the following assets as collateral.
How much collateral can I set in total?
At the moment, you can set no more than the equivalent of €50,000.00 Euro as the total collateral value.
One of your collateral allocations must be designated the primary. If you have
only allocated funds from one asset to collateral then that allocation is automatically the primary.
With more than one allocation, a primary selector in the collateral panel lets you choose the primary.
Closed proﬁts and losses from margin trading are settled in the asset that was set as primary and will be automatically added to (or deducted from) that primary collateral allocation. For example, if you allocate 1000 EUR as your primary collateral, then the proﬁt or loss for any margin trade will be automatically
converted to EUR on settlement (when the trade closes), regardless of which currency pair you traded. Alternatively, if you have allocated BTC as your primary collateral, then all proﬁts and losses from margin trading will be converted to BTC on settlement.
With multiple collateral allocations, it is possible that a large trading loss could exceed the value of your primary allocation. If this happens, the current primary allocation is used to cover part of the loss and the next largest collateral allocation would become the new primary, with any remaining loss being deducted from that. (This process can repeat over multiple collateral allocations until the loss is completely covered.)
What is margin and how is it calculated?
Your Available Margin can be thought of as your buying power (or selling power) for trading. It is calculated as follows:
Available Margin = Collateral Value less unrealized Loss (if any) less Margin Fees
Owed (if any)
For example, if your allocated collateral is valued at $10,000 USD and you have open positions with unrealized losses of $2,500 USD and margin fees owing of $10 USD, then your available margin would be $7,490.
Used Margin is the amount of available margin that has been set aside to cover
open positions. It is calculated as follows:
Used Margin = Net Exposure / Leverage. (This is the collateral that is "Locked up" in open trades and/or open orders).
For example, if the net exposure (value) of your open positions is $20,000 USD and your account leverage is 5X (5:1), then your used margin would be $4,000 USD.
Note: If you have open orders (limit orders that have not been filled yet), then the margin these orders would need when they get filled is "Reserved" as well. This "reserved" margin will be included in the Used Margin.
Note: When you have open positions for the same pair in different directions (buy vs sell), the net exposure for the pair is the difference between the value of the open ‘buy’ positions and the open ‘sell’ positions for that pair.
Free Margin = Colletaral - Used margin +Profit or - loss.
Free Margin %
This is Free Margin expressed as a percentage of Available Margin. Its value is normally in the range from 0% to 100%, but it can go negative. New trades can’t be opened while the Free Margin % is 0% or less.
Also, when the free margin goes to 0%, any pending open orders will be automatically canceled.
If it drops from 0% to -70% (which can happen quickly!) it triggers a stop-out (see below).
When a position closes, the margin used by that position is freed up, thereby decreasing the used margin and increasing the free margin. Similarly, when a limit order is canceled, the margin reserved by that order is freed up, decreasing the reserved margin and increasing the free margin.
All of the above margin measures are displayed in the margin info bar at the bottom right of the Trade screen.
What is the Margin Currency?
At the top-right side of the margin platform, you will see the settings wheel. Once you click on that, it will open up the settings you can choose from for the platform.
Where it states "Show PnL in", you will be able to choose between EURO, or BTC to have your P&L, Collateral, Used Margin and Free Margin displayed in.
You can change the margin currency at any time.
How do I open a margin trade?
The steps to open a margin trade are:
1. Select the pair. This can be done by clicking on the pair that is already open in the platform at the top right. This will give a drop-down panel from which you can choose any pair.
2. Complete the order form.
You can choose between Market order, Limit order, or Stop order.
3. Click the large Buy or Sell button at the bottom of the order form. If you don’t
have 1-click trading enabled you will be prompted for conﬁrmation.
What is the difference between orders and positions?
An order is an instruction to enter a trade. These are created via the order form.
It speciﬁes the pair to trade (eg BTC/EUR), order type (Market, Limit, Stop or Stop).
Trade size and optionally other information, including the price levels at which the trade should be closed, like Take Proﬁt and/or Stop Loss.
An order can be ﬁlled as soon as it is placed (eg Market orders), or it can take longer (often the case with Limit orders).
While an order remains unﬁlled (or only partially ﬁlled) it is listed in the Open Orders panel where it can be modiﬁed or canceled.
hen an order is ﬁlled (either completely or partially), a position is created with open P/L (proﬁt/loss) that automatically updates in real-time as the market price for the pair changes.
Open positions are displayed in the Position Summary and Positions panels. A position can be closed automatically or manually (see below). When a position is closed, the open P/L converts to closed
P/L and updates the wallet and collateral allocations for your Primary collateral currency.
This means that the profit or loss you had on that trade is converted into the primary collateral value.
How do I close an open position?
An open position can be closed manually or automatically. To close a position manually, click the on either "Limit", or "Market" icon to the right of the position in the "Active Positions" panel. There are also buttons available in the "Active positions" panel to partially close a position or to close the full position.
When you click on Limit, you will be able to set a limit price. Once you set a price limit there, you are setting up a limit order to close out the trade at exactly that price. Please note that this means that in order for the position to close out fully, it will need to fill 100% of the trade size as well. It can also fill partially where you will close out the trade in parts until the full trade volume is filled.
When you choose to close the trade by clicking on "Market", then you will choose to close out the full volume of that trade at the next best price. This next best price starts at the top of the book (Bid or Ask) price and will fill the order from the next best price to the worst price until the entire trade is closed.
A position can be closed automatically in any of the following situations:
The Take Proﬁt price is hit, resulting in the position being closed at the speciﬁed price or better. Note: if the Take Proﬁt is only touched on thin volume without trading through it, your position might be only partially closed, or not closed at all.
The Stop Loss price is hit, resulting in the position being closed at the current
market price, possibly incurring slippage.
Setting a Take profit and/or Stop loss price on your open position is done by clicking on the trade in the Active positions panel. You will see the following:
Another reason why your trade could be closed is when your Free Margin % drops to -70%, triggering a stop out, which closes all your margined positions for a heavy loss. To avoid this from happening you should employ good risk management, for example by using stop losses and risking only a small amount of your collateral per trade.
If we select an Active Position, we have some other functions available to us.
- Close (market order)
- Double (duplicates the order at the current price)
- Reverse: Closes the current position and reverses the direction of the trade.
Note: These are made via market order.
What is a margin call and stop out?
Traditionally, a margin call is when a broker phones up a client to request additional funds be deposited to the client’s account to prevent trades from being liquidated due to large unrealized losses.
With CoinMetro, a margin call is triggered when your free margin drops to zero due to open losses.
It will look like this:
At this point, your Free Margin % will equal 0%. When this happens you will be notiﬁed via email and possibly other means, and you will be unable to place new trades until your free margin becomes positive again, either through closing losing positions, depositing more funds, or waiting for your losing
positions to improve (which may not happen).
If your losing positions are not closed and they continue to move against you, your Free Margin % can go negative. If it drops to -70% a stop-out is triggered which liquidates (closes) all your open positions and deducts the net losses from your collateral balance(s), starting with the primary collateral you have set.
How are margin fees charged?
The margin fee, which is interest on the borrowed margin is 0.08222% daily. This is calculated hourly on borrowed margin and charged every 24 hours (averages out to about 30% per year).
This Margin fee owed is automatically paid from your primary collateral.
What zoom level should I set for my browser window?
For optimal viewing of the CoinMetro website (including the margin trade screen), a browser zoom level of 100% is recommended, provided you don’t have display scaling enabled in your device’s operating system. If you do, you may have to adjust the browser zoom level. For example, with a display scaling of 125% enabled you will need to set the browser zoom to 80% for optimal viewing.