Margin trading is basically “borrow to trade,” meaning you trade using only a part of your own assets and borrow from other people to fill in the rest. This part of your assets is called “initial margin,” or “margin used” on QUOINE dashboard. The rate between margin used and what you would have to pay were the trade made in spot trading is called “leverage rate.” QUOINE supports the following leverage rates: 2x (50%), 4x (25%), 5x (20%), 10x (10%), and 25x (4%).
Other than the initial margin, you will also pay a daily interest for the loan you have taken for the trade from your free assets or “free margin,” i.e. assets that are not used for margin or pending withdrawals.
In other words, with margin trading, you don't actually buy or sell anything. Instead, you are betting on how the price of the product will move.
For example, if you "buy" 1 BTC for the price of 450 USD, then what actually happens is that you borrow 450 USD to buy 1 BTC. That 1 BTC isn't really yours because you bought it with borrowed money. You are betting on the fact that its price will move up higher. When it actually moves higher to 460 USD, you sell that 1 BTC back to the system, get 460 USD, and use 450 USD to pay back what you have borrow. Your profit is the difference between two prices, which is 10 USD.
Similary, if you "sell" 1 BTC for the price of 450 USD, then you borrow 1 BTC from system to sell at 450 USD. When the price moves down to 440 USD, you use 450 USD to buy back 1 BTC at 440 USD to return it to system. Your profit is the price different, which is 10 USD.
These examples have not taken interest rate into account. There will be an interest rate when you trade margin because again, you are basically borrowing to trade, and loans always come with interest.
Buying in margin trading is called "trading long," and selling "trading short."
Since you only invest a part of your assets to cover the trade instead of the whole price and still receive the same profit should the market moves in your favor, what you gain from margin trading is considered much elevated that from spot trading. However, the loss is also elevated. When your free margin gets too low, a margin call will be issued, and your trades will be force-closed, one by one, to cover the loss.
If you are a first time margin trader, we do not recommend trading at high leverage rates, as this can lead to profound loss should the market move against you.