Margin Trading on Bybit: Full Breakdown & Transcript

[00:03] in this video you will learn everything about margin trading on the bybit exchange, trading, transferring funds between accounts, classes and debt repayment, how leverage works, what interest you pay with this type of trading, we will consider all the pros

[00:18] and cons and most importantly, see all this in practice, let's go. margin trading? What is margin trading? And why is it needed?

[00:34] So, margin trading allows you to use the exchange's credit funds to make transactions in simple terms. Here you can borrow funds from the exchange and trade on them. The two main features of the margin market are

[00:47] that you can borrow and that you can earn on a decline, that is, make a profit when the price of the coin falls. Before moving suggest looking at an example where it is explained how exactly this works. This is

[01:00] very useful for general understanding. Especially for beginners. So, let's imagine margin market. You have $ 100 and the price of the coin that you If you want to buy now, it also costs 100 dollars, but here you can borrow

[01:13] additional dollars, for example, 200 dollars, and together your deposit will already be 300 dollars. That is, it will be multiplied by three times X3. Then you buy coins with all this money in the amount of 3 pieces. When the price rises to 110, you will

[01:28] sell it all and get 330 dollars. You will give 200 dollars back to the exchange, these are the ones you borrowed. And you will have 130 dollars left: 100 of your original ones and 30 that you earned. If you had not borrowed and

[01:42] traded only with your 100 dollars, then with such growth you would have earned only 10 dollars with a margin purchase. Everything is clear, now let's analyze a margin sale, it is more complicated for understanding. Let's imagine the same situation. We have 100

[01:56] dollars and the price of the coin is also 100 dollars. To make money on a decrease, we need to borrow two more coins from the exchange. Then we sell these two coins and in total we get 300 dollars. Now we wait until The price of the coin will fall after the price of the

[02:10] coin fell to $90, we will buy these two coins to give them back to the exchange and we are left with $120 instead of the original $100. Thus, we earned $20 on the decline. If you noticed, in the first case, on

[02:26] the increase, you earned a little more than $30. This is because we entered the deal with the coins we already had. That is, those people who did not bet on the decline would now sell the coin for $90, and we have $120. As you can

[02:39] see, the difference of $30 between us and ordinary holders, here you might think: Why would the exchange suddenly lend money? It’s not profitable for it when everyone is earning. And what will happen to the coin? It will fall if it

[02:52] falls to zero. How to repay the debt? Well, that means, firstly, the exchange doesn’t care where the price goes. It earns exclusively on interest. On the interest you pay for using the loan. Now, as for how to repay the debt if the price

[03:05] falls to zero, this was for A mechanism called liquidation was invented. Liquidation is a procedure that ensures the forced closure of the position of exchange traders. It works as follows. In the case of margin

[03:17] trading, the risk of irrevocable loss of capital increases with the size of the leverage. If we have the third leverage, this means that we increase the liquidation approximately three times. This is because liquidation is calculated using this formula. So,

[03:31] the higher the leverage, the closer the liquidation will be. If the price of the coin reaches this value, our position will be closed and we will irrevocably lose all the money, and then it will no longer matter whether the price goes up or down. We will have nothing left.

[03:46] This happens in this way: when we borrow and buy a coin, the liquidation price will be approximately 73. If the price of the coin reaches this mark, our position will be closed. The exchange will take $100 for the debt we took. These

[04:01] places will cover their expenses in dollars. And we will be left with nothing. This is exactly the same principle of liquidation for margin sales. When the price of the coin goes up against us, our deal will also be closed. The only way to avoid this is to

[04:13] add funds. If we do this, the liquidation will be postponed proportionally to the amount added funds, but the transaction amount will also increase. I hope you liked this explanation and you understood that margin trading carries the

[04:26] risk of losing all assets. Now, after all this theory, let's finally move on to practice. Look at the exchange's functionality first. You need to open a margin account. Go to the bybit exchange and click on "Trade" at the top.

[04:40] Next, hover over "Margin Trading" on the right. You will be provided with a list of trading pairs that you can trade. Choose any and you will be redirected to the trading terminal, or you can simply click on "Spot Trading"

[04:53] and from here you can select a trading pair from the list. trading, we select coins labeled 10x. Coins without labels are not involved in this.

[05:06] Coins labeled "Long" or "Short" are also not included. Choose leveraged tokens. There will be a separate video about this. Let 's say I select Bitcoin. On the screen, we see a standard chart with all the settings. I'll switch to "Trading."

[05:20] Next, we see the order book, or, as they say, "Stack." And here we see buy and sell orders. Well, the trading terminal itself is at the top, you can switch between spot and Unlike Binance, walrus on Bybit does not require

[05:33] separate transfer of assets to the margin account. Here, spot and margin are one and the same. When you first open margin trading, you will need to pass a test. There is nothing complicated there and all

[05:45] incorrect answers will be highlighted. If you do not have funds in your Sputnik wallet, you can click on transfer at the very bottom. Select the location from where you want to transfer below. Select the coin you need, the amount, and click

[06:00] confirm. After you have funds, make sure that margin trading is enabled. Click on the three dots in the right corner and enable the route. Now, as for leverage,

[06:13] everything is done here somehow not very conveniently and not very clear. I don’t know why, maybe it is at the development stage. In general, when you switch to margin trading, you can increase your deposit up to a maximum of 10

[06:26] times, you can double it, or five times, but not more than 10 with this. Understandable. For example, I have 20 USDT and when you switch to margin, you immediately see the maximum amount. The usdt that you will have together with the leverage,

[06:41] for me it is almost 138 usdt And then you might think, Why not usdt And then you might think, Why not 200, because 20 with a tenth leverage is 200 usdt. This is one of the inconveniences. The maximum leverage size is not written

[06:54] on the coin here, but we can calculate it ourselves. Just divide 138 by 20 and get 6.9, this is the maximum leverage size. This is the take. Moreover, it is different for each coin. If we choose a less

[07:08] popular coin, for example, this one, then the maximum leverage will be even less. You see, here it is no longer 137 but 54 usdt. We divide 54 by 20 and get a maximum leverage of 2.7. There is no slider here

[07:25] to choose the leverage yourself. So you need to calculate everything yourself with a slider. We trading account. But this is not the case here. I think you understood everything about the leverage. If not, then write in the comments if you understood, then Like further. As for orders,

[07:41] they all work the same way. I'll leave a link to this video in the description for some spot market. Here I select the market field below, you need to write the amount of SD you're willing to spend, or you can select it with the slider.

[07:53] If I bring it up to 15 percent, I'll buy only with my iOS DT below. It tells us the loan amount is 0 because we're only buying with our own money. And if I move it further, we'll get the loan amount. Let's bring it up to 40 USDT and you see, the

[08:08] total amount is SDT. That is, I'm taking the third leverage and will triple my 20 USDT. And as I said at the beginning of the video, we pay the exchange interest for borrowing funds. These interest rates are different for each coin and can

[08:22] constantly change. You can see the daily interest rate above the chart or go to this margin data. Click on the guide and on the margin data, and here you can see the annual and daily interest rate for all coins.

[08:37] These interest rates are debited from you every hour from the beginning of the loan. If you hold the borrowed assets for more than an hour, you will be forced to pay. In 2 hours, I think this is also clear. And now very important information: you pay this interest for

[08:52] borrowing from the exchange and that's it. There, trade as you wish, or don't trade, the interest will accrue anyway because you hold these borrowed assets. If you create a pending order of the conditional type, the actual borrowing of funds will

[09:07] occur only when the order is executed, and only then will the interest accumulate, since I have a market order. This means that interest will begin immediately upon execution of such an order. Commissions for executed orders, like in regular

[09:19] spot trading, are 0.1 percent for all types of orders. Well, then we click buy, and it turns out that we simultaneously borrow from the exchange and open a position. Here you can see the order details: order type, margin 10x, order price market. This means the

[09:35] opening fee, then the number of coins we buy, the coins we buy, the order cost is 60 usdt, the loan amount is 40 usdt, and the daily interest rate is the interest you pay for borrowing funds. Then

[09:47] click buy. The order was triggered. If we switch to spot, we will see. that our SDs are gone And we can borrow another 77 usdt on margin below the chart unfortunately you can't see open positions like on Binance and

[10:02] we don't see the liquidation price but we can look at some details if we roughly find out where the liquidation price is we can look at the LTV percentage it is currently at 71 percent this is the average risk if the coin

[10:17] moves Not in our direction then this percentage will increase and when it reaches 87 you will receive a notification on your phone or email that you need to add margin to the spot wallet If you don't do this and the

[10:32] coin price continues to fall then after reaching 95 percent the liquidation process will begin and all your assets in the spot wallet will be lost in addition you will pay 2 percent of the amount for liquidation and it may be that when you are

[10:46] liquidated you will have a debt for borrowing funds that you will not be able to repay due to insufficient funds so these two percent will replenish the insurance fund from which the exchange itself can repay this accumulated interest but it is better

[11:00] not to liquidate Well, if this LTV is below 60 percent, then you can safely transfer assets from the code account, and the lower it is, the more you can. If you want to transfer all funds, you first need to pay off

[11:14] all debts. Now let's imagine that the price of the coin has risen and we want to lock in the profit. We switch to spot in order to sell the bitcoins we bought. We switch to selling, select the quantity, I select

[11:28] everything and sell, and now we have our SDT back along with the borrowed ones. Now we can open new positions. And if you don't plan to open, then it's better to return the borrowed funds back. This can be done by clicking the

[11:43] repay button below. By default, our coin is already listed here, which we borrowed the amount we borrowed, the percentage that we accumulated, and the total amount. I that we accumulated, and the total amount. I click confirm everything. That's it, we have

[11:56] returned its debt to the exchange. Now let's put it on the downside. Let's say we believe that the price of the coin will fall and want to make money on this. Let's choose another coin, say, XRP. We switch to Short, select

[12:11] the amount that I want to borrow from the exchange, say, 30 percent of the maximum, and click sell. We look at the order parameters and confirm everything. The order was executed. It turned out that we borrowed xrp coins from the exchange and sold them, and in

[12:27] exchange received USD, which will be visible to us in the pot. You see, additional USD appeared. Everything is correct. Now let's imagine that after some time, the price of the coin fell and we want to take the profit. To do this, you

[12:40] need to buy them back. Switch to spot, select the quantity. I select everything and click buy. Now we bought xrp. If you want, you can return them to the exchange. We also

[12:53] click redeem and confirm. That's it. Well, we still have our xrp left. We can sell them too. I select everything and sell. This is how margin selling is carried out, that is, earnings

[13:09] on a decline. Now, as for the collateral, all these coins are on the spot account and are collateral for their positions, but there is a small nuance. The fact is that their estimated value can

[13:21] differ greatly from the market price. To see their value, click on the three dots in the right corner and click on the parameters. Here you see the multipliers for calculating the value. How to understand this, well, look, let's say we have There are

[13:35] 100 USDT, their estimated value will be 100 USDT. If we have Bitcoins in the amount of 100 USDT, their estimated value will be 95 USDT, and the TRX coin will be valued at only 70 USDT. That is, if we have these coins on stop

[13:51] and act as supporting margins, their value will be reduced compared to the real market price. So, if you want to add more margin, then USDT. And if you have already bought or want to buy coins and store them for several years,

[14:06] but are afraid of losing them due to liquidation, then it is better to transfer them from the margin wallet to the financial one. It's very simple. Go to your assets,

[14:20] select where you want to transfer the spot and where the financial one. Select the the spot and where the financial one. Select the coin quantity and transfer. I remind you that you do not pay any commissions for internal transfers. Now our SDT is on the

[14:34] financial account, from here they will not disappear anywhere. If suddenly you have a liquidation on the margin wallet. In the account, then naturally only those coins that were there, other accounts will not be affected and Let's

[14:47] look at the spot account itself at the very end, it has almost the same functions as in the Trading terminal: transfers, conversion, interest repayment, history, order history, let's borrow and buy now, to tell everything in detail a little, we borrow and

[15:02] tell everything in detail a little, we borrow and buy you see the total capital, this is how much money is in the account, net capital is

[15:14] exactly our funds and liabilities are our debts, here you can also see the analysis by NL if you go Well, of course, all our funds that are in the account, you can also pay off the debt here, click on repayment

[15:30] Select a coin, but now we can only pay off the interest for borrowing funds because on these borrowed usdt We bought coins for ourselves and we can return the interest only when we sell the coins Well, let's

[15:43] sell the coins Well, let's pay off the interest now, I click pay off everything That's all, I think you now understand how margin trading on bybit works Thank you for watching this video to the end I hope it was useful for you

[15:56] and you learned a lot of new things from it If you If you liked the video, give it a like. Also, subscribe to the channel so you do n't miss such interesting and useful videos. Leave your comments below the video, and then reply to them.

[16:09] In the description below the video, there will be links to the crypto exchanges Binance and Ebaybit. These are the two exchanges I trade on. There will also be links to my social networks. Thanks again to everyone for watching, good luck in your future trades. Bye everyone.