Leverage and Bracket in Margin and Futures trading

What is leverage?

Leverage is the value between your own funds and the available amount of borrowed funds that you can use. This mechanism allows you to increase your trading positions by using borrowed funds that exceed your own capital.

Leveraged Margin and Futures trading can involve a high risk of losing money, so it is important to understand how it works and manage your risks.

This allows traders to maximise their potential income, but also exposes them to potential losses.

On our exchange, leverage is applied to the entire account. The maximum leverage allowed for margin trading pairs is 10x. However, for futures contracts, you have the option to choose higher leverage levels such as 50x and 100x.

It is important to use leverage carefully and consciously, taking into account your risk level and investment strategies.

How to change the leverage?

You can change the leverage directly from the trading page or by following the steps below:

  • Go to your account settings;
  • Go to the Leverage section;
  • Select a new leverage value.

 

Please note that if you try to change the leverage when there are open positions, the system will ask you to confirm this action and warn you about the associated risks.

It is important to remember that changing the leverage will affect the ratio of free funds (not used in the position and on the collateral balance) to the funds used in the position. An increase in leverage requires less collateral for the position (the own funds in the position), so a decrease in leverage may increase the risk of liquidating already open positions with higher leverage.

After changing the leverage, if there are not enough available funds in the account (or close to zero), the position collateral will decrease, and the liquidation price will approach.

 

If, when trying to reduce leverage, there are not enough funds on the balance to cover the position and there is a risk of liquidation, the system will generate an error and warn that this action is not possible.

How to manage risk when using leverage?

WhiteBIT Exchange is constantly improving its methods of effective risk management.

This includes applying different weights to margin assets that can be used as collateral for leveraged trading.

It is also worth mentioning that the maximum leverage can be further restricted for specific futures markets. This restriction is called a Bracket and defines the maximum position size when using high leverage.

 

It is important to note that you should carefully check the maximum leverage allowed for the selected futures market before opening a position.

For example, if your account is set to 100x leverage, but the Bracket for a particular market is set to 0 for 100x leverage, then your position will be secured with 10x leverage.

 

Currently, the restrictions apply to 20x, 50x and 100x leverage levels. If the amount of your position (displayed in the Total field) exceeds the set Bracket, then the appropriate 50x or 100x leverage (depending on the one selected) will be applied to a portion of that amount (that does not exceed the Bracket), and 10x leverage will apply to the remaining amount.

 

More information about the weights for marginal assets and maximum position size parameters can be found in the relevant sections of our website.

What are the most common questions that come up?

What happens if I am on the futures trading page and I change the leverage to 100x if the account was previously set to 10x leverage?

  • The leverage will be set to 100x for futures trading, but for margin trading it will remain at 10x, which is the maximum leverage allowed for margin trading pairs.

 

What happens if I change the leverage on the BTC/USDT margin trading pair page to 10x if the account was previously leveraged to 50x?

  • Leverage of 10x will be applied for both margin and futures trading.

 

How will the available balance for trading change if, when selecting 5x leverage, the personal funds on the collateral balance are 100 USDT?

  • With 5x leverage you can increase your available funds for trading by 5 times more than your own capital. For example, if you have 100 USDT of own funds, with 5x leverage you will have 500 USDT to trade with. In this case, 100 USDT represents your own funds and the remaining 400 USDT represents borrowed funds.

 

What happens if part of the amount in the Futures position exceeds the Bracket while the rest of the amount does not?

  • Suppose you have 1000 USDT and you want to use 100x leverage to open a position in a futures market (BTC-PERP) with a total value of 60,000 USDT. This market has a bracket for 100x leverage of 50,000 USDT. In such a situation, 100x leverage would be applied to a part of the total position of 50,000 USDT, which would be (500*100) = 50,000 USDT, and 10x leverage would be applied to the remaining part of the total position of 10,000 USDT, which would be (500*10) = 5000 USDT.

Support

In case of any questions related to the functionality of our exchange, you can:

  • Leave a request on our website;
  • Write to the support email: support@whitebit.com;
  • Write to the chat using the button in the lower right corner of the screen (in the WhiteBIT app, go to “Account”—“Support” in the upper left corner).

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