Leverage borrowing is an advanced form of trading that allows investors to amplify their positions by borrowing additional funds. While powerful, this method requires careful execution and understanding. Below is a step-by-step guide to manual leverage borrowing on OKX exchange.
What Is Leverage Borrowing?
Leverage borrowing enhances traditional leveraged trading by simplifying access to borrowed funds, enabling traders to magnify potential gains (or losses). It involves borrowing cryptocurrencies from an exchange and using them to trade with multiplied exposure. Whether you're new to leveraged trading or experienced, learning how leverage borrowing works can expand your trading strategies.
Step-by-Step Guide to Leverage Borrowing on OKX
Step 1: Access Trading Interface
- Log in to your OKX account.
- Navigate to Trade > Futures and select your desired cryptocurrency (e.g., BTC).
Step 2: Enable Borrowing Mode
- Click the gear icon (settings) in the upper-right corner.
- Under Isolated Margin Settings, select One-Click Borrowing.
- Choose the trading pair for leveraged borrowing.
Step 3: Transfer Collateral
- In the trading window, select Manual Mode (default).
- Click Transfer to move funds from your main account to the borrowing account.
- Enter the amount (e.g., 10,000 USDT) and confirm.
Step 4: Borrow Funds
- Specify the amount to borrow (e.g., 10,000 USDT) to reach your desired position size (20,000 USDT total).
- Confirm the borrowing request.
Step 5: Execute Trade
- Enter the trade details (e.g., buy BTC at 20,000 USDT).
- Select Buy (Long) BTC to open the position.
Step 6: Close Position & Repay
- When ready to exit (e.g., BTC rises to 30,000 USDT), sell your position via Sell (Short) BTC.
- Confirm the transaction to realize profits (30,000 USDT balance).
- Repay borrowed funds: Navigate to Borrow > Repay, enter the amount, and confirm.
- Transfer remaining funds back to your main account.
Can You Short with Leverage Borrowing?
Yes! Leverage borrowing supports short-selling, where traders profit from price declines:
- How It Works: Borrow an asset (e.g., BTC), sell it at the current price, then repurchase it later at a lower price to repay the loan.
- Example: If BTC drops from $30,000 to $20,000, you profit from the $10,000 difference minus fees.
- Risk Note: Shorting carries high risk—if prices rise, losses can exceed initial collateral.
Risks & Considerations
- Interest Accumulation: Unrepaid loans accrue interest, increasing debt.
- Liquidation: Exchanges may force-sell assets if collateral value falls below thresholds.
- Platform Rules: Accounts may be frozen for non-compliance.
👉 Master Leverage Trading Strategies to optimize risk-reward ratios.
FAQ
1. Is leverage borrowing suitable for beginners?
While accessible, beginners should start with small amounts and practice risk management.
2. What’s the minimum collateral for borrowing?
Varies by platform; OKX typically requires a percentage of the borrowed amount (e.g., 10–50%).
3. How are interest rates calculated?
Rates depend on loan duration and market demand, often displayed in real-time.
4. Can I adjust leverage levels after borrowing?
Some platforms allow dynamic adjustments; check OKX’s terms.
5. What happens during forced liquidation?
Positions are closed automatically to recover borrowed funds, potentially at a loss.
6. Are there alternatives to manual borrowing?
Automated tools like One-Click Borrowing streamline the process but limit customization.
Final Tip: Leverage borrowing magnifies outcomes—always assess market conditions and your risk tolerance before trading. For advanced tactics, explore OKX’s educational resources.