When you want to trade on margin, funds need to be in your margin wallet (use the Wallets page to do this).
To open a short position:
- Go to the Trading page > Select the desired pair to open your short > Margin section (not Exchange)
- Setup a Margin Sell order (specify the amount, order type, price).
- (optional) specify the desired options for margin funding. "Advanced Funding Options" button.
- Place an order by clicking on "Margin Sell", Margin Funding will automatically be taken care of by the system through the p2p margin funding platform. (if you wish you can also manually reserve margin funding. Reserved margin funds will be used instead, if available).
- When you want to close the position, either use the close button (a Market Margin Buy order will close the short) or place Limit Margin Buy order of the same amount of BTC as your short. When the order is completely filled, the short also closes, borrowed funds are repaid and profit/losses will be credited to your trading wallet balance.
Bitfinex allows users to trade with up to 5x leverage in some pairs while most margin pairs are traded on a 3.33x leverage.
To open a leveraged long position, exactly the same but open a position with a buy order and close with a sell order.
Initial equity is 30%. This means the USD value of the funds you hold in your Margin wallets need to be at least 30% of the USD value of the position you wish to open.
So if you have 1000 USD in your margin wallet. That 1000 USD will serve as collateral for opening margin positions 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 if you intend to open a position where USD is the base currency, eg BTC/USD.
Please note, when holding a currency as collateral that is not the base currency of the position you wish to open, the maximum allowed margin is slightly lower because it is corrected: [maximum leverage] - 0.3 * [USD value of Margin trading balance in the currency that is not the base]. As the base currency is the second currency of the pair.
Assuming a BTC price of 250 you would be able to open a long or short margin position of 3333 / 250 = 13.333 BTC
Let say you open a long position of 13.333 @ 250, but the price starts dropping...
When the net value of your balance reaches 22.5% of the initial value of the margin position you will get margin called. When the net value of your account falls below 15% of your borrowed funding value, the position will be force-liquidated.
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 margin)
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 your position will be force-liquidated.
This will happen when your position is worth 3333.33 - 500 = 2833.33 USD.
To calculate the liquidation price we need to know the price to sell the BTC at to end up with that amount: 2833.33 / 13.33 = 212.50 USD per BTC
The liquidation price will be around 212.50 USD. This can vary a bit, due to interest payments and trading fees. but 212.50 is a quite 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 liquidity providing 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 needed liquidity will be automatically borrowed at the best available rate. (you can also reserve margin funding manually).
The system takes the best available offer(s), i.e the lowest offer(s) available. A margin trader can input some conditions for the required margin funding (while having the order form set to margin > open the drop-down menu by clicking on the three vertical dots > select advanced funding options) 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).