In order to place a leveraged order on the Spot Exchange, you will need to ensure that margin trading is activated on your Nexo Pro account.
Margin trading is built on the principle of leverage, meaning that as a result of the trade you will receive the desired asset in a larger amount (up to 5x leverage). In other words, the value of the purchased asset will be up to 5 times greater than the value of your initial balance.
When placing a leveraged order, you can borrow funds to trade with, on top of your initial balance (in other words, your margin), with the maximum leverage of 5x. During a margin trade, the initial balance plus the borrowed amount will be sold to obtain the counter asset.
Keep in mind that the borrowed amount will be reflected in your account in the form of a loan under Active Debt, whereas the purchased amount (the counter asset) will be used as collateral along with your other assets which are not In Orders for this debt and reflected in your Trading Balance.
𝙀𝙭𝙖𝙢𝙥𝙡𝙚 : Your initial balance is 0.5 BTC totalling 10,000 USD and you decide to buy NEXO/BTC with 5x leverage. Suppose the NEXO/BTC rate is 0.00005.
The 5x leverage means that your total purchasing power increases fivefold – to a total of 2.5 BTC (or 50,000 USD). In this case, 0.5 BTC (or 10,000 USD) is your margin (initial, non-borrowed balance) and the remaining 2 BTC (or 40,000 USD) is the borrowed amount, which will be placed in the Active Debt. As a result of the trade, 2.5 BTC, or 50,000 USD, will be sold to purchase the counter asset (NEXO) at the rate of 0.00005:
2.5 BTC / 0.00005 = 50,000 NEXO
Once the order is closed, 50,000 NEXO will be reflected in your Trading Balance. This amount will be used as collateral for your Active Debt in the amount of 2 BTC (or 40,000 USD).
It is important to note that trading with borrowed funds comes with a periodic interest that will be charged on your Active Debt.
We strongly recommend reviewing the following articles about Margin Trading before placing margin orders on Nexo Pro:
𝗜𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁:
- Margin Trading and the Futures Exchange are currently unavailable for residents of the United States of America, Canada and Australia.