Spot margin trading is a margin-based trading model built on the spot market. It allows users to borrow funds from the exchange to increase their trade size, thereby amplifying potential returns—while also increasing risk accordingly.

Unlike futures leverage, spot margin trading involves actual spot transactions. The assets that users hold or borrow in spot margin trading are withdrawable cryptocurrencies, unlike in derivatives trading where positions are based on contracts.

 

Features

Flexible Leverage Ratio

Exchanges typically offer leverage of 3x, 5x, 10x, etc., allowing users to choose based on their capital and risk tolerance.

Margin System

Users must deposit a certain amount of their own funds as margin. The system dynamically calculates a risk ratio based on margin and borrowed funds.

Borrowing Interest Mechanism

Users borrow assets through their margin accounts and pay interest based on borrowing duration (usually calculated hourly).

Forced Liquidation Risk

If the risk ratio falls below the liquidation threshold, the system will automatically liquidate positions to repay the loan and prevent further losses.

Support for Long and Short Positions

Users can go long (borrow stablecoins to buy crypto) or go short (borrow crypto to sell for stablecoins), catering to different trading strategies.

 

Use Cases

Amplifying Returns

In bullish markets, users can borrow funds to buy more crypto, increasing profits as prices rise.

Short-term Profit Optimization

Take advantage of short-term market fluctuations. Leverage magnifies small price differences, improving arbitrage efficiency.

Hedging Risk

Users holding spot assets can hedge against downside risk by shorting the same asset via margin.

Capital Efficiency

Users can expand position sizes without committing full capital, improving fund utilization and allowing more flexible asset allocation.

 

Spot Ｍargin Trading is a flexible option between regular spot trading and futures trading, suitable for investors with a basic understanding of risk management. It allows you to trade with leverage while still holding real, withdrawable crypto assets — combining the authenticity of spot with the characteristic of leverage.

However, margin trading comes with higher risks. Users should be cautious about operational risk, set proper take-profit and stop-loss levels and manage the positions wisely to protect your assets.

Risk Disclosure

Margin trading involves significant risks and may result in partial or complete loss of funds, making it unsuitable for all investors. Market fluctuations, strategy failures, or technical issues may adversely affect trading results. Past performance is not indicative of future outcomes. Please carefully evaluate your risk tolerance and consider seeking advice from a professional financial advisor. LBank bears no liability for losses incurred from Margin trading.