Margin Trading

Margin trading refers to using borrowed funds to pay for a trade. Margin trading allows traders to open a position in the market without paying the entire price up-front.

Before delving deeper into Margin trading, below are some terms related to Margin trading you should be familiar with.

Term	Explanation
Leverage	Leverage refers to the use of borrowed funds to pay for a trade.For example, if a trader wishes to buy a $1000 token for 5x leverage, they will only have to pay $200 upfront, and the exchange or broker will pay the remaining amount.
Equity	The value of an account based on the current market price minus the borrowed amount is known as equity.
Margin	Because of the real-time fluctuation in the Crypto market, the equity level will also fluctuate. If the equity level drops below a certain level, the trader may have to sell some or all their positions or add more funds to their account.
Margin Call	If the equity level drops below the set threshold level the trader gets a notification known as a Margin call.
Collateral	The assets that are available in the user’s account are used as collateral.
Liquidation	If the trader fails to meet a margin call the exchange can sell its assets to pay this loan. This process is known as liquidation.

Let us try to understand these concepts more with an example.

Assume we bought a crypto token worth $1000, with 5x leverage. In this case, you will be paying $200 and the exchange or broker will pay $800.

	Spot	Margin
Amount that the trader Invested($)	200	200
Borrowed Amount($)	-	800
Total Amount Invested($)	200	200+800 = 1000
Increase of 10%	220	1100
Profit($)	220 - 200 = $20	1100 - 800 - 200 = $100

In the case above, you will make a profit five times Spot trading because you have invested 5x the amount up-front.

But, Margin trading is a two-edged sword. So, instead of increasing by 10%, if the token's value drops by 10%, you will lose 5x the amount.

For example,

	Spot	Margin
Amount that the trader Invested($)	200	200
Borrowed Amount($)	-	800
Total Amount Invested($)	200	200+800 = 1000
Decrease of 10%	180	900
Loss($)	180 - 200 = - $20	900 - 800 - 200 = - $100

First Margin Order on CoinDCX API

To place a margin order, follow these steps:

Use the following endpoint to place your margin order.

https://api.coindcx.com/exchange/v1/margin/create

Specify the following details in the body of your code:

Parameter	Required	Description
market	Yes	Indicates the pair for which the order is being placed.
Quantity	Yes	The quantity of the asset to be traded.
price	Yes	Price of the asset per unit.
leverage	No	Refers to the capital borrowed from the exchange or broker to increase the returns.
side	Yes	Indicates the side for which you are placing the order. Acceptable values are: Buy Sell
stop_price	No	Indicates the price at which the order stops.
order_type	Yes	Indicates the order type. The following order types can be used: market_order limit_order stop_limit take_profit
trailing_sl	No	Indicates an order placed with trailing stop-loss.
target_price	No	Indicates the price at which you wish to either buy, sell, or close the order.
ecode	Yes	Indicates the exchange code in which the order will be placed.
timestamp	Yes	Indicates the timestamp at which the request was generated.

Once the order has been placed, you will receive a confirmation in the following format.

[
    {
        "id": "30b5002f-d9c1-413d-8a8d-0fd32b054c9c",
        "side": "sell",
        "status": "init",
        "market": "XRPBTC",
        "order_type": "limit_order",
        "trailing_sl": false,
        "trail_percent": null,
        "avg_entry": 0,
        "avg_exit": 0,
        "fee": 0.02,
        "entry_fee": 0,
        "exit_fee": 0,
        "active_pos": 0,
        "exit_pos": 0,
        "total_pos": 0,
        "quantity": 200,
        "price": 0.000026,
        "sl_price": 0.00005005,
        "target_price": 0,
        "stop_price": 0,
        "pnl": 0,
        "initial_margin": 0.00520208,
        "interest": 0.05,
        "interest_amount": 0,
        "leverage": 1,
        "result": null,
        "created_at": 1568122929782,
        "updated_at": 1568122929782,
        "orders": [
            {
                "id": 164993,
                "order_type": "limit_order",
                "status": "initial",
                "market": "XRPBTC",
                "side": "sell",
                "avg_price": 0,
                "total_quantity": 200,
                "remaining_quantity": 200,
                "price_per_unit": 0.000026,
                "timestamp": 1568122929880.75,
                "fee": 0.02,
                "fee_amount": 0,
                "filled_quantity": 0,
                "bo_stage": "stage_entry",
                "cancelled_quantity": 0,
                "stop_price": 0,
            }
        ],
    }
]

You can use the id parameter in the response to,

Edit Order Details
Cancel an Order
Retrieve data for an order

To know more about specific endpoints for these, refer to the API Documentation.

First Margin Order on CoinDCX API​

First Margin Order on CoinDCX API