Debt Ratio
KuCoin offers two margin trading modes: Cross Margin and Isolated Margin. Cross Margin supports up to 5x leverage, while Isolated Margin supports up to 10x. Both are adjusted differently based on your debt ratio.
Your debt ratio is updated every 5 seconds. You'll receive warning alerts if it exceeds 95%, and forced liquidation occurs at 97%. Your current debt ratio can be seen on both the Margin Account and Margin Trading web and app pages.
Mode | Leverage Multiplier | Initial Debt Ratio (Excluding Interest) | Alerts at | Liquidation at | Debt Ratio for Outward Transfers |
| Cross Margin | 1-5x | 80% | 95% | 97% | ≤ 60% |
| Isolated Margin | 1-10x | 90% | 95% | 97% | ≤ 60% |
Note: Assets can only be transferred out of the Margin Account if your debt ratio is below 60%. The lower the ratio, the more assets can be transferred. To move all of your assets, check your respective margin account details and clear all liabilities first.
Liquidation
This occurs when the mark price of your position's assets changes, causing the debt ratio to reach 97%. When forced liquidation is triggered, your held assets in the Margin Account will be sold (liquidated) to repay debts.
Process:
1. Liquidation is triggered when the margin account's debt ratio equals or exceeds 97%.
2. Upon Liquidation:
2.1 Warning Alerts: You'll receive alerts via email, SMS, or platform notifications, depending on your account settings.
2.2 Restrictions
i. Placing new orders is not allowed (regardless of trading pair).
ii. Any unfulfilled orders for all trading pairs are automatically canceled.
iii. During the liquidation process, any transfer of funds into the Margin Account is unavailable.
3. After liquidation occurs, the system takes control of and liquidates all positions to repay your debts. Any remaining balance, after deducting a fee (about 1% of the total position value) to cover negative balance risks, is returned in USDT or the liquidated token.
Important Reminders:
1. The debt ratio is calculated using the mark price.
2. Margin trading involves high market risk, which can amplify both gains and losses. Past profits do not guarantee future returns. Extreme price fluctuations may lead to the total liquidation of your assets. The information provided here is solely to inform, and not meant to be taken as financial or investment advice. You are responsible for your own trading strategies and the risks they entail. KuCoin is not liable for losses incurred through margin trading.
FAQs
Liquidation is triggered when the margin account's debt ratio equals or exceeds 97%. 2. Upon Liquidation: 2.1 Warning Alerts: You'll receive alerts via email, SMS, or platform notifications, depending on your account settings.
How is debt ratio calculated margin trading? ›
To calculate the debt-to-assets ratio, divide your total debt by your total assets. The larger your company's debt ratio, the greater its financial leverage. Debt-to-equity ratio : This is the more common debt ratio formula. To calculate it, divide your company's total debt by its total shareholder equity.
How do I lower my KuCoin debt ratio? ›
High Risk: > 90% debt ratio. Reducing Risk: To lower your debt ratio, consider transferring more assets into your Margin Account.
What is difference between cross and isolated margin? ›
Cross Margin: Margin is shared between open positions with the same settlement cryptocurrency. When needed, a position will draw more margin from the total account balance of the corresponding cryptocurrency to avoid liquidation. Isolated Margin: Margin assigned to a position is restricted to a certain amount.
What does a debt ratio of 37 50% indicate? ›
Interpreting the Debt Ratio
If the ratio is over 1, a company has more debt than assets. If the ratio is below 1, the company has more assets than debt. Broadly speaking, ratios of 60% (0.6) or more are considered high, while ratios of 40% (0.4) or less are considered low.
What is the debt ratio in trading? ›
A company's debt ratio can be calculated by dividing total debt by total assets. A debt ratio of greater than 1.0 or 100% means a company has more debt than assets while a debt ratio of less than 100% indicates that a company has more assets than debt.
How do I get my debt ratio down? ›
How do you lower your debt-to-income ratio?
- Increase the amount you pay monthly toward your debts. ...
- Ask creditors to reduce your interest rate, which would lead to savings that you could use to pay down debt.
- Avoid taking on more debt.
- Look for ways to increase your income.
3. After liquidation occurs, the system takes control of and liquidates all positions to repay your debts. Any remaining balance, after deducting a fee (about 1% of the total position value) to cover negative balance risks, is returned in USDT or the liquidated token.
How do I avoid liquidation in KuCoin? ›
Fair Price Marking is used at KuCoin Futures for the purpose of avoiding liquidation due to illiquid markets or manipulation.
Is it better to trade cross or isolated? ›
Cross margin is suitable for novice traders or traders seeking to hedge existing positions but can increase the likelihood of entire balance loss. Isolated margin is suitable for traders seeking to gain greater control over margin requirements or minimize the risk of entire balance loss.
Cross margining makes higher leverage possible, allowing traders to open larger positions with less money. It bears more risk but prevents individual position liquidation by acting as a buffer with the account balance.
Is cross margin safer than isolated? ›
Isolated Margin: Controlled risk, high predictability, but limited leverage and requires active management. Cross Margin: Flexibility, low risk of individual liquidation, but high overall risk and potential for overleveraging.
What is the formula for cross margin? ›
The Collateral Value Ratio of the Cross Margin Account = Collateral Value / (Total Liabilities + Outstanding Interest), where: Collateral Value = Current Total Market Value of All Digital Assets in the Cross Margin Account * Collateral Ratio (calculated separately for each asset and then aggregated)
Can I withdraw money from my margin account? ›
Margin accounts are taxable, and are not considered 'registered' accounts with the government. Due to this, withdrawals are not regulated, or limited in any way.
What is cross margin transfer? ›
Cross margining is an offsetting process whereby excess margin in a trader's margin account is moved to another one of their margin accounts to satisfy maintenance margin requirements. The process allows a company or individual to use all of their available margin across all of their accounts.
How do you calculate debt margin? ›
- The formula for calculating margin debt is:
- Margin Debt = (Total Value of Securities Purchased with Margin - Equity)
- In other words, margin debt is calculated by subtracting the equity in a margin account from the total value of securities purchased with margin.
Margin debt is the amount of money that an investor borrows from their broker via a margin account. Margin debt can be used to buy securities. Meanwhile, the typical margin requirement at brokerages is 25%, meaning that customers' equity must stay above that ratio to prevent a margin call.
What is the formula for calculating debt ratio? ›
The debt ratio, or total debt-to-total assets, is calculated by dividing a company's total debt by its total assets. It is also called the debt-to-assets ratio.
How is margin ratio calculated? ›
The net profit margin is equal to net profit (also known as net income) divided by total revenue, expressed as a percentage.
