BitBns, a newly launched Indian Exchange has announced Margin trading, making it the first Indian Exchange to support this. Margin trading is is concept which has existed in the Stock Market, where traders can borrow stocks and increase their profit.
BitBns announced the launch in a blog post explaining what leverage trading is and how it would work on their exchange. Any verified user will be able to lend and borrow Cryptocurrencies for leverage trading.
Lenders can set the amount of cryptocurrencies they’re lending and the number of days they can be lent. Borrowers can also place order with the same fields. Once a day, orders are matched and executed.
Users will have an option to go both short and long. Also, BitBns will have forced liquidation to recover lender’s money when the borrower’s account value falls below a minimum threshold. This helps keeping lender’s funds safe.
Margin Trading is extremely risky and is only for advanced traders because both profits and losses are exponential. You can loose all your funds through forced liquidation when a trade does not go your way.
Margin Trading will be available on BitBns from tomorrow and they’ve announced that it will be available only for XRP for now. The interest rate is set at a standard 0.055% per day, giving lenders 20% profit per year in Cryptocurrencies. Lenders will be allowed to borrow upto 1x of their existing assets. Meaning, if you have 1000 XRP, you’d be able to borrow 1000 more XRP, making your total trade worth 2,000 XRP.