What Is Leverage Trading?

Simply put, leverage trading allows traders to trade futures contracts without needing a large amount of capital. First, you need to deposit a certain amount of funds based on the contract value. After that, you can borrow additional funds to amplify your trading position and increase your purchasing power.

Leverage trading encourages traders to reassess their positions on a daily basis. If an account balance falls below the required level, the trader must replenish the shortfall as soon as possible to avoid potential risks. Otherwise, the exchange may liquidate any open positions until the account balance meets the minimum maintenance requirement. If a trader does not wish to deposit additional funds, they may also voluntarily close underperforming positions.

Perpetual Futures

Most futures contracts on XXKK are perpetual, meaning they have no fixed expiration date. Traders are free to decide how long they wish to hold their positions, significantly improving market liquidity by allowing low-cost entry and exit. In addition, perpetual futures are based on the asset's index price, which reflects the average spot price and trading volume of that specific asset.

Funding Fee

The funding fee, also known as the funding rate, is a unique concept in cryptocurrency trading. Since perpetual futures have no settlement date, profits and losses cannot be calculated in the same way as traditional futures contracts. On XXKK, the funding fee represents the transfer of profits and losses between traders based on the price difference between the futures market and the spot market. It is calculated and updated every 8 hours. XXKK does not charge this fee. Instead, the funding fee is transferred directly from the losing side to the winning side according to their open positions. More information about the funding fee is available here.

Terminology

Below are several important terms related to leverage trading that will help you become familiar with the process more quickly.

Margin Types

XXKK offers five different types of margin: Initial Margin, Maintenance Margin, Variation Margin, Available Margin, and Risk Margin.

Initial Margin is the minimum amount of net assets that must be deposited before opening any position. It serves as collateral for the trade.

Maintenance Margin is the minimum balance that must be maintained in the account while a contract remains open. It is usually lower than the Initial Margin.

Variation Margin is the difference between the Initial Margin and the current margin balance. It is calculated only when additional margin is required, meaning the account balance has fallen below the required Maintenance Margin.

Available Margin represents the total amount of assets available for opening new positions.

Risk Margin is the most complex of the five margin types because it represents the trader's actual delivery obligation. For example, due to favorable market conditions, Xiaoming decides to open a long position of 5 BTC on XXKK. However, because of significant market volatility and the possibility of a price decline, Xiaoming also opens a short position of 2 BTC to hedge against potential losses. As a result, if the BTC price falls, Xiaoming's maximum delivery obligation is reduced to 3 BTC instead of 5 BTC. This maximum obligation represents Xiaoming's Risk Margin.

Margin Modes

As a leading cryptocurrency derivatives exchange, XXKK provides both Isolated Margin Mode and Cross Margin Mode.

Under Isolated Margin Mode, each position is assigned a specific amount of margin and an independent isolated margin account. The Initial Margin for each isolated position is independent of other positions and is also separate from the Available Margin. This mode encourages traders to actively manage individual positions and is particularly suitable for highly speculative trading, as the maximum possible loss is limited to the isolated margin balance.

Under Cross Margin Mode, all positions share margin from a unified margin pool, allowing traders to utilize all available assets in their margin account. Please note that on XXKK, traders may have multiple margin pools corresponding to different settlement currencies. Only open positions settled in the same cryptocurrency can share the same margin pool.

Trading USDT-Margined Futures on XXKK

1. Supported Trading Pairs

XXKK supports more than 50 trading pairs with leverage of up to 200x. For USDT-Margined Futures, both profits and losses are settled in USDT.

2. XXKK USDT-Margined Futures: Step-by-Step Guide

XXKK provides one of the easiest and most convenient ways to trade cryptocurrency futures. The basic steps are as follows:

1.Go to the XXKK USDT-Margined Futures trading page and log in with your XXKK ID.

2.Transfer assets from your account to your Futures Account. Internal transfers are free of charge.

3.Start trading by opening a position. Select your preferred trading pair, margin mode, leverage, price, quantity, and position direction (Long/Short).

Please refer to the interactive USDT-Margined Futures opening guide on the XXKK web platform.

Submitted and processed orders will appear under Current Orders. Once an order has been successfully executed, you can find it under Positions, where you may adjust leverage or close the position as needed.

View your Profit and Loss (P/L). P/L is also displayed under Positions and consists of two categories: Unrealized P/L (calculated based on the Mark Price and not yet realized) and Realized P/L. Once a position has been closed, the P/L will be displayed under Trade Details.

Close your position. You may manually enter order details to close a position or use a Limit Order to partially close it. Alternatively, Lightning Close allows you to instantly close the entire position. Please note that Close Position orders may be canceled.

Processed orders can also be viewed under Current Orders.

3. Leverage and Risk Management

XXKK encourages users to trade responsibly and prudently by utilizing comprehensive risk management strategies and platform features.

One of XXKK's unique advantages is that profits and losses are settled in real time, demonstrating our commitment to providing a mature and accurate trading infrastructure that enables users to manage their accounts according to market conditions. Furthermore, to help users manage their trades more efficiently, when both long and short positions share the same settlement currency, such as USDT or BTC, XXKK calculates fees based on only one side of the position. Using the previous example, Xiaoming's margin account would only incur fees for the long position.

XXKK users may also freely choose between Cross Margin Mode and Isolated Margin Mode to improve portfolio performance while reducing liquidation risk.

In the event of a margin call, traders must meet the Initial Margin requirement within the specified time to maintain their open positions. Otherwise, forced liquidation will occur, closing positions until the remaining account balance satisfies the Initial Margin requirement for any remaining positions.

Forced Liquidation under Isolated Margin Mode:
At a 100% Margin Ratio, if the isolated account balance plus Unrealized P/L is less than the Maintenance Margin, the position will be forcibly liquidated.

Forced Liquidation under Cross Margin Mode:
At a 100% Margin Ratio, if the cross margin account balance (excluding isolated margin balances and unrealized P/L from isolated margin positions) is less than the Maintenance Margin, the position will be forcibly liquidated.

In such cases, XXKK users may take the following actions to reduce potential losses:

1.  Cancel Orders: Under Isolated Margin Mode, only the opening and closing orders of the affected isolated position will be canceled, one position at a time. Under Cross Margin Mode, all opening and closing orders will be canceled, including those under Isolated Margin Mode.

2.  Cancel all hedge orders across all trading pairs (excluding orders under Isolated Margin Mode).

3.  Reduce leverage by two leverage levels at a time (excluding orders under Isolated Margin Mode).

Please note that while the system is processing risk controls, no other operations can be performed until the process is complete.