Nexo Pro – Margin trading FAQ
In this article:
- Overview
- What is Cross Margin
- Margin Trading on the Spot Exchange
- Margin Trading on the Futures Exchange
- Important notes
1. Overview
Margin Trading operates on the principle of leverage, allowing you to obtain a greater quantity of the desired asset than your initial Nexo Pro balance would permit. This means the value of the assets you acquire can exceed the original funds in your Nexo Pro account. The excess amount will appear in your account as a debt.
The total amount acquired through Margin Trading is presented on the dashboard as Outstanding Debt.
Note: While leverage can increase potential profits, it also amplifies potential losses. This inherently higher risk necessitates a thorough understanding of how Margin Trading works. We strongly suggest that you review this article carefully before beginning to trade on margin.
2. What is Cross Margin
Nexo Pro utilizes the Cross Margin method, meaning that all of the assets stored in your Nexo Pro portfolio will be used as collateral for all your debts generated through margin trades on the Nexo Pro Spot Exchange and futures positions on the Nexo Pro Futures Exchange.
For example, you open a margin-based Buy order on the BTC/USDT pair (to buy BTC with USDT) and have DOT and AXS in your Nexo Pro portfolio. In that case, the latter two assets and your USDT balance will be treated as collateral for your Active Debt and count towards the Current Margin Level.
If the Margin Level falls below the Liquidation Threshold indicated on the Nexo Pro platform, the system will sell parts of your collateral to restore the Margin Level above the Liquidation Threshold. During severe market downturns, a significant portion of the collateral could be sold to maintain the healthy state of your debt.
Remember that only the balances stored in the Nexo Pro account are shared across your margin-based trades. If your Margin Level decreases, funds stored in your Nexo Savings Wallet will not be automatically transferred to Nexo Pro to back your positions.
If your Total Balance on Nexo Pro depreciates in value, you have to manually move assets from the Savings Wallet to increase your collateral.
3. Margin Trading on the Spot Exchange
To place a leveraged order on the Nexo Pro Spot Exchange, you have to activate Margin Trading for your Nexo Pro account.
How to activate Margin Trading
1. Click on the gear icon in the upper-right corner of the screen on the Nexo Pro interface.
2. Select Margin Trading from the dropdown menu.
3. Once at the Margin Trading screen, switch ON the Enable margin trading toggle. The same toggle can be later used to deactivate Margin Trading.
Alternatively, you can turn Margin Trading ON/OFF using the Margin toggle above the Buy/Sell button on the Nexo Pro Spot Exchange interface.
Note: On Nexo Pro, margin-based orders are only available to customers who understand and accept the risks of leveraged trading. Clients also have to complete a Margin Trading questionnaire.
Trading example
Margin Trading on the Nexo Pro Spot Exchange comes with 5x leverage. During a margin trade, the initial balance plus the amount acquired through debt will be sold to obtain the counter asset.
Remember that the debt amount will be reflected in your account under Active Debt. In contrast, the purchased amount (the counter asset) will be used as collateral along with your other assets that are not In Orders for this debt and will be reflected in your Trading Balance.
Example:
Your initial balance is 0.5 BTC, totalling 50,000 USD, and you decide to buy NEXO with 5x leverage. Suppose the NEXO/BTC rate is 0.000015.
The 5x leverage means your total purchasing power increases fivefold – to 2.5 BTC (or 250,000 USD). In this case, 0.5 BTC (or 50,000 USD) is your margin (initial, non-debt balance), and the remaining 2 BTC (or 200,000 USD) is the debt amount, which will be placed in Active Debt.
As a result of the trade, 2.5 BTC, or 250,000 USD, will be sold to purchase the counter asset (NEXO) at the rate of 0.000015:
- 2.5 BTC / 0.000015 = 166,666.67 NEXO
Once the order is completed, 166,666.67 NEXO will be reflected in your Trading Balance. This amount will be collateral for your Active Debt of 2 BTC (or 200,000 USD).
Interest rates
Margin Trading on the Nexo Pro Spot Exchange comes with periodic interest based on your Active Debt, which is applied every 15 minutes.
Note: Debts repaid less than 15 minutes after opening the trade will still be charged interest (origination fee). For example, if you open a leveraged trade and close it in 4 minutes, you will be charged interest for the first 15 minutes.
Nexo’s interest rates are listed on the Margin Trading page in your Nexo Pro account. Only the assets presented on this page are currently available for Margin trading. To calculate the interest for 15 minutes, you can use the following formula:
- Interest for 15 minutes = Outstanding Debt x Yearly Interest Rate / (365 x 96)
For example, consider the following debt with its respective yearly interest rate:
- Outstanding Debt = 15,000 USD in terms of BTC
- Yearly Interest Rate for BTC = 10%
Then, the interest will be calculated as follows:
- For 15 minutes = 15,000 USD x 10% / (365 x 96) = 0.0428 USD in terms of BTC
- For 1 hour = 0.0428 USD x 4 = 0.1712 USD in terms of BTC
- For 1 day = 0.1712 USD x 24 hours = 4.1088 USD in terms of BTC
- For 1 week = 4.1088 USD x 7 days = 28.7616 USD in terms of BTC
- For 1 year = 4.1088 USD x 365 days = ~ 1500.00 USD in terms of BTC
4. Margin Trading on the Futures Exchange
Trading with margin on the Nexo Pro Futures Exchange means using leverage to amplify the value of your USDT and open more significant positions.
The differences between Margin Trading on the Nexo Pro Spot Exchange and Nexo Pro Futures Exchange are that only USDT can be used as collateral for futures positions and that you can use greater leverage settings for futures positions.
You can visit our dedicated article to learn more about the Nexo Pro Futures Exchange.
5. Important notes
- You can check the accumulated debt interest through the Activity tab under Interest.
- The calculations in this article are for exemplary purposes only. The up-to-date yearly interest rate can be viewed on the Margin Trading page.
- Nexo Pro is unavailable to clients residing in the United Kingdom.
- Margin Trading is currently unavailable for residents of Australia.
- The Nexo Pro Futures Exchange is currently unavailable for residents of Australia and some countries in the EEA.
- The content and examples presented in this article are for informational and educational purposes only and include no warranties. They should not be interpreted as financial advice or a recommendation to buy specific assets. Please note that digital assets are volatile, and the value of your investment can fluctuate based on market conditions. We advise you to trade responsibly.