Guide to Trading Anchor on Liquid Exchange
Liquid Exchange Overview
Liquid is the world’s largest crypto-fiat platform by transaction volume today, regulated in Japan. Powered by the World Book, which provides customers enhanced price matching and deeper liquidity for various fiat and cryptocurrency pairs.
In the span of two years Liquid:
- September 2017 – Became the first global cryptocurrency exchange to be officially licensed by the Japan Financial Services Agency.
- October 2017 – Became the first licensed global cryptocurrency exchange in Japan to launch a global Initial Coin Offering (ICO), also known as the Qash Token Sale.
- November 2017 – Successfully raised 350,000 ETH (approximately USD105 million) through the sale of 350 million Qash in an oversubscribed ICO, to fund the growth of the Liquid platform.
- September 2018 – Historical trading platforms, Quoinex and Qryptos, were merged and relaunched as Liquid.
- July 2018 – Trading platforms exceeded USD50 billion in transaction volume in the past 12 months.
- October 2018 – Featured in KPMG’s Top Fintech 100 list
- April 2019 – Achieved tech unicorn status in the first close of our Series C fundraising, with a valuation of over $1 billion.
Liquid also offers powerful trading features which include:
- Margin trading of up to 100x leverage for select crypto-fiat pairings
- A sophisticated user dashboard for pro traders
- Secure cold wallet storage and KYC compliance for individual and corporate customers
- Proprietary World Book technology that matches orders across global order books, providing access to liquidity pools sourced by a unified platform, Liquid.com
- Liquid Infinity, a Bitcoin Contracts For Difference (CFD) product that provides up to 100x leverage
How To Use the Liquid Exchange App
Quick Exchange is a feature on Liquid that facilitates the simple exchanging of digital assets and fiat currency. It’s very simple to use - you select the currency you’d like to buy and the currency you’d like to pay with. Enter the amount and complete the transaction.
Quick Exchange is a very simple exchanging method and it allows its users to trade easier than on the normal exchange.
Also, there is no limitation in order size and there is no set fee for Quick Exchange. Bare in mind that availability of exchange pairs depends on the prevailing market conditions. Read more on Liquid.com >>
Forced liquidation will immediately close live orders and loan bins. It occurs when margin coverage breaches 100% of used margin. So, what happens then?
- Cancel live Limit orders (both Spot and Margin)
- (After cancellation of all limit orders) If margin coverage is still less than 100%, the system will cancel live loan bids (the ones with the highest rate first) and an email will be sent to notify the user.
- (After cancellation of all limit orders and all live bids) If margin coverage is still less than 100%, the position will be closed and an email will be sent to notify the user about the forced liquidation.
Liquid Margining Model is applied to both Cross and Isolated margin features.
In this model, forced liquidation happens when maintenance margin is breached. The model is new and it’s advantageous to Liquid’s users, as it gives significantly more leeway when it comes to forced liquidations.
For instance, for Infinity 100X leverage, the required margin under the new model is 1% (100X) and the maintenance margin is 0.5%.
Traders can receive a fee rebate, payable in QASH/LQC, based on trading volume activity for the month. Volume and rebates will be calculated at the end of each calendar month, to be paid on the fifth business day of the following month.
The rebate increases the more you trade. This applies to all trading products on Liquid: Spot, Margin, Infinity.
Here are some important margin trading terms you need to know about.
Leverage - Choose the amount you want to put into a margin trade and the desired leverage (Liquid offers 2x, 4x, 5x, 10x, and 25x leverage).
Lender & Borrower - Lenders put aside a part (or all) of their balance on the platform to issue loans to margin traders (that makes margin traders the borrowers).
Interest Rate & Interest - Interest rate is the rate of the loan you take from the lender to finance your margin trade. On Liquid, this rate is daily. Interest is the amount you have to pay daily, calculated from this rate.
Open Price & Close Price - Here’s an example: Your total balance is $50. You put $10 into a margin trade at 10x leverage and borrow $100.
Action 1: using $100 borrowed from lender, buy 1 BTC at price A.
Action 2: sell 1 BTC at price B, return $100 to lender. Trade closes.
Price A is called open price. Price B is called close price.
Profit & Loss - Profit & Loss, referred as P&L or PNL, is what you make from your margin trade and is calculated as: (Open Price - Close Price ) * Size ( Quantity ).
Take-Profit & Stop-Loss - Take profit limits are normally associated with margin open positions. They are used to close an open position and to “take profit” on a profitable position when the price is moving in a favourable direction to the open position. Similar to take profit, stop-loss limits are usually associated with open positions and act upon them when the price indicated by the user is reached. They are designed to allow the trader to stop or cap their losses when the market moves against their position.
Margin Call & Forced Liquidation - Margin call is a “call” from system alerting that your free margin is getting too low. When free margin reaches margin maintenance % the open margin trade will be liquidated by force.
One-Direction, Two-Direction, Net-Out - One-Direction means that the newly opened position has to be in the same direction as currently open position. Two-Direction means that the newly opened position does not have to be in the same direction as currently open position. Net-Out means that the newly opened position cancels out currently open position.
Multi-currency trading - This applies when your funding currency is not the same as the quote currency of the product/trading pair you want to trade, and it’s available in margin trading mode only.
Cross Margin Liquidation Process - Cross margin takes into account available balance when calculating margin coverage and other parameters. Liquidation for cross margin happens when margin coverage reaches 100%.
What is Cross Margin? Cross margin is a margin shared between your positions. Important difference - it’s backed by your entire wallet balance of the funding currency.
Who can trade on Cross Margin? Users from supported countries are eligible to trade.
What are the funding currencies I can use to trade on Cross Margin? Fiat currencies: USD, EUR, JPY, SGD and AUD. Cryptocurrencies: BTC, ETH, QASH, XRP, GUSD, USDC.
What are the advantages and disadvantages of Cross Margin, compared to Isolated Margin? The main advantage is that you can use the whole funding account and reduce your chances of getting liquidated. The main disadvantage is that you cannot adjust the amount of margin for each Cross Margin Position.
Liquidation for cross margin happens when margin coverage reaches 100%.
Calculated as: Margin Coverage = ( Free Balance + P&L) / Margin Maintenance x 100
Isolated margin is the margin placed into a single position and is isolated from other positions in your funding currency account balance.
Cross margin is a margin shared between your positions and backed by your entire wallet balance of the funding currency.
What is Isolated Margin? Isolated margin is the margin placed into a single position and is isolated from other positions in your funding currency account balance.
Who can trade on Isolated Margin? Users from supported countries are eligible to trade.
Can allocated margin amount be shared between different isolated positions? No. Each isolated position has its own allocated margin.
Can I have both cross margin and isolated margin position opened at the same time? Yes.
Cross Margin is enabled by default. You can enable Isolated Margin on the order form panel at the right side of the Trading Dashboard.
Once you're logged in to Liquid, select Margin to go to Margin trading UI. The following steps also apply to Infinity.
Select your trading product by hovering the cursor on the top bar.
Below is a screenshot of the Order Form in Margin Trading mode, with Advanced Trading Options expanded.
All indicators can be customized to your liking.
Now let's say we want to open a 1 BTC long position at market price in BTC/USD product, leverage 5x, from funding account USD. That means we need to place a:
- MARKET order type
- Product BTC/USD (selected at STEP 2)
- SHORT side
- Quantity 1
- Leverage 5x
- Mode One-Direction or Two-Direction
- Funding Acc. USD
Click on the “Cost” to see all the details of the order you're about to place.
By opening this position, you are borrowing 1 BTC to open the SHORT position. To open the position, click Open (Short) Position. The system will prompt you to confirm everything again.
Click Submit Order to go through, or Dismiss to return.
You just opened a position! The position can be monitored in the Positions panel.
Expand the Columns drop-down menu to see all the indicators you may need. Filter through your positions using the Funding Account marker (USD) and Position status (Open/Closed).
Since we used a Market order to open the position in this article, the Orders panel on the left will also be populated.
You can hover your mouse to the pairs i.e BTCUSD to show your position details.
You can click on the margin to increase your margin. By adding additional margin to the position will increase the liquidation price for this short position. You cannot decrease your margin.
Liquidation price is the price at which a position is forced liquidated. Once the market price moves just below the liquidation price for long positions the equity is no longer sufficient to maintain the position.
When forced liquidation happens, the liquidation engine will take over the position. Force liquidated positions are marked at the bankruptcy price.
Market order - It’s an order to be executed immediately at the current market price. Market is the simplest and most basic order type. It tells the order management system (OMS) that the user is willing to take whatever price is available in the market.
Limit order - This is an order to be executed when market price hits a limit. This limit must be better than market price at the time the order is entered. Limit orders are not always executed as there is always a chance that market price never hits the limit.
Stop order - Also an order to be executed when market price hits a limit. This limit must be worse than market price at the time the order is entered. Similar to limit orders, stop orders are not always executed.
Trailing-stop order - This is a stop order with a limit that "trails" after market price. They are normally used by traders to lock in profits of an existing position once the position PNL has gone into positive territory.
An order book is an electronic list of buy and sell orders for a specific security or financial instrument, organized by price level.
ASK is the red side of the order book:
How much you will spend buying one unit of the product.
How much sellers are asking for by selling you one unit of the product.
BID is the green side of the order book:
How much you can get by selling one unit of the product.
How much buyers are bidding to buy from you one unit of the product.
When one order of one side (ASK or BID) is matched with another order on the opposite side, the matching results in one or more executions. Depending on the side of the trader, executions can be either BUY or SELL. Transactions go from one currency account to another or from one currency account to external (out of the exchange).
Circuit breakers monitor the Liquid markets constantly and are triggered upon >=40% price swing. Once triggered, they disable the market of that product immediately for both spot and margin trading.
Spot trading is your normal buying and selling. On Liquid, spot trading is available under EXCHANGE. A margin trade is basically a bet, made with borrowed money, on which way a product price will move and how much it will move.
The Claim button is by default on the far right of the Positions panel.
If you claim positions regularly, it might help to move the Claim column to the left side.
Click Confirm when prompted, or Dismiss to go back.
Trading on margin carries high risk and requires deeper knowledge and understanding of the process. Always consider carefully your objectives, trading experience, and risk level before trading on margin. Full explanation is in this video.
When you close a position (fully or partially), following things happen:
- System generates an order that is in the opposite direction of the first order you placed upon starting the position.
- Once this order is filled, the proceeds from SELL are used to pay back what you borrowed. If the proceeds alone aren't enough to cover, system will use your real balance.
- The position is marked as closed (if closed fully) and PNL is recorded accordingly.
Locate the position you want to close in Positions panel.
You will need to specify how much of the position you want to close.
Click Submit to confirm, or Dismiss to go back.
Orders and Positions panels are your go-to place to monitor your trading actions. For margin trading in particular, Total PNL panel is essential as it provides details on margin used, available margin, and margin coverage of your trades.
Note the Columns drop-down menu and the filters in both panels - this is where you can choose what information to be displayed. Columns can also be moved left and right within each panel.
Total Unrealized P&L panel
To monitor your balances, visit Wallets page. Note that the big balance numbers on top - Estimated Balance, Available Balance, and In Orders - are the total of your balances in each category, converted to BTC and USD. For the exact numbers, see individual currency accounts in the long list under Balance.
All historic deposits and withdrawals can be viewed in their own tabs, Deposits and Withdrawals.
Open Orders, as its name indicates, shows all open orders you're having in your Liquid account.
Transactions include all transactions ever happened in your Liquid account - deposits, withdrawals, trades, interest, loan fee, etc.
Finally, Overview Report in the same Transactions tab generates an execution report (buying/selling actions) within a chosen period.
NAVIGATING LIQUID TRADING UI
Trading fee preference can be changed under Account Settings > Application Setting.
Limit Order is the default option of the Order Form in both spot trading and margin trading modes. This is to prevent slippage that is often caused by big market orders.
Below is a screenshot of the Order Form for a buy Limit order, in BTC/USD pair. Funding currency in this case is USD by default.
You will need to specify:
- Price: the most inconvenient price at which you're willing to trade BTC (limit price)
- Quantity: how much BTC you want to trade
For a Limit order to work like it's supposed to, the Limit price has to be:
- lower than market price if you're buying
- higher than market price if you're selling
System will also estimate Cost and Fee for you. Click their Indicators to expand the content. Note that these numbers are just estimation and correspond with the specs of your order.
Once you decide on a Price and Quantity of your Limit order, you can click Place Order. System will prompt you to review and confirm the details of your order again before actually sending it to the Order Book.
Click Submit Order to confirm and go through with your order, or Dismiss to go back and change some details.
Only orders that are not filled 100% and are still in Live status can be cancelled. Locate the order you want to cancel in the Orders panel. Click Cancel and confirm when prompted.
COMMON ERROR MESSAGES
To make sure there are no "fake" orders on the order book, Liquid will lock a part of your balance when you place a limit order that is not matched and filled immediately.
Your balance needs to be larger than the trade you want to claim. For example, if the trade is 3 BTC for $30000 and you have exactly $30000, you cannot claim the trade. You need to have more - even an extra $.0000001 will do.
GO LIQUID WITH ANCHOR
Anchor Tokens (ANCT) are available on Liquid Exchange.