With margin trading, you borrow funds from a broker or another party to the trade, which increases your profits and risks. Learning about Binance margin trading might be intimidating, especially when there is so much to know and understand.
With more than 600 margin trading pairs available on the internet today, Binance offers reasonable trading costs and excellent liquidity. Being aware of the Binance Margin Quiz Answers for 2023 is a prerequisite to margin trading, so keep on reading this article to know the following:
- What is Binance Margin Trading?
- What is the Binance Margin Quiz About
- Answers to Binance Margin Quiz Questions
- Tips for Margin Trading
Table of Contents
Binance Margin Quiz Answers (Updated in Jun 2023)
Binance Margin Quiz Question 1
Binance Margin includes cross margin and isolated margin. Which one of the following sentences does not describe their difference?
- In isolated margin, borrowing, trading, and risk management functions are included in an independent isolated margin account, while in cross margin, each user can only open one cross margin account where borrowing, trading, and risk management functions are available.
- They have different interest rates
- They have different maximum leverage ratio
- They support different borrowables
Binance Margin Quiz Answer 1: They have different interest rates
Binance Margin Quiz Question 2
Margin level is used to evaluate the risk level of your margin account. How is margin level calculated?
- Margin level = total assets value/(total borrowed value + total accrued interest value)
- Margin level = total assets value/(total borrowed value – total accrued interest value)
- Margin level = total borrowed value/ total accrued interest value
Binance Margin Quiz Answer 2: Margin level = total assets value/(total borrowed value + total accrued interest value)
Binance Margin Quiz Question 3
Which of the following events will force you to liquidate?
- The margin level has reached the liquidation level
- The current margin level has reached the initial margin level
- The total debt is lower than the total interest
Binance Margin Quiz Answer 3: The margin level has reached the liquidation level
Binance Margin Quiz Question 4 – Margin Interest Calculation
How often is margin interest calculated?
- Hourly, at the time of borrowing
Binance Margin Quiz Answer 4: Hourly, at the time of borrowing
Binance Margin Quiz Question 5 – Manual Borrowing
Do you need to borrow manually before trading?
- No, you can use the “Auto Borrow” function on the trading page
Binance Margin Quiz Answer 5: No, you can use the “Auto Borrow” function on the trading page
Binance Margin Quiz Question 6 – Maximum Borrowing Limit
Which one of the following factors does not affect your maximum borrowing limit?
- The borrowing period
- The amount of funds in your margin account
- Your VIP level
- The system borrowing limit
- Your individual borrowing limit
Binance Margin Quiz Answer 6: The borrowing period
Binance Margin Quiz Question 7 – Borrowing Interest Rate
Which of the following sentences correctly describes your borrowing interest rate?
- The borrowing interest rate will change the market, and the system will notify you when it changes
- The borrowing interest rate will be determined at the time of borrowing, with no changes afterward
Binance Margin Quiz Answer 7: The borrowing interest rate will change the market, and the system will notify you when it changes
Binance Margin Quiz Question 8 – Repaying Debts
In the event of liquidation, how to repay your debts?
- Binance insurance funds will write off your debts
- You are required to repay the debts yourself
Binance Margin Quiz Answer 8: Binance insurance funds will write off your debts
Binance Margin Quiz Question 9 – Paying Interest Fee with BNB
How to pay the interest fee with BNB in cross margin?
- Transfer BNB to cross margin account and repay manually
- Repay with the loan
Binance Margin Quiz Answer 9: Transfer BNB to cross margin account and repay manually
Binance Margin Quiz Question 10 – Margin Call Notification
When receiving a margin call notification, what should you do?
- Borrow more funds to hedge the risk
- Reduce your position to repay the debt or add more collateral into the margin account
- Do nothing
Binance Margin Quiz Answer 10: Reduce your position to repay the debt or add more collateral into the margin account
Binance Margin Quiz Question 11 – Liquidation Clearance Fees
A forced liquidation occurs when the margin level reaches the liquidation level. Users are charged a “Liquidation Clearance Fee” in the event of forced liquidation. Which of the following contains the correct description for the Liquidation Clearance Fees?
- The Liquidation Clearance Fee is a fixed value for each liquidation
- When the position is forcedly liquidated, the user will only be charged with commission fees of liquidation orders and does not need to pay additional “Liquidation Clearance Fees”
- When the position is forcedly liquidated, a Liquidation Clearance Fee will be charged according to the amount of the assets being liquidated. The system may use all the remaining assets in the margin wallet to complete the liquidation
Binance Margin Quiz Answer 11: When the position is forcedly liquidated, a Liquidation Clearance Fee will be charged according to the amount of the assets being liquidated. The system may use all the remaining assets in the margin wallet to complete the liquidation
Binance Margin Quiz Question 12 – Margin Wallet Under Liquidation
When your margin wallet is under liquidation (margin level liquidation level) which of the following best describes what will happen?
- You will not be able to trade with this wallet
- The system will automatically sell your assets to repay your debts
- You will be charged a liquidation clearance fee according to the amount of assets being liquidated
- All of the above
Binance Margin Quiz Answer 12: All of the above
What is Binance Margin Trading?
Margin trading involves borrowing money, placing cash as collateral, and trading assets using borrowed funds. Binance uses margin trading to perform asset trades using funds supplied by a third party.
Investing with borrowed cash can significantly increase your earnings. In contrast to standard trading accounts, Margin Trading accounts allow traders to take advantage of positions with extra money. The notable benefits of this Binance Margin Trading type are:
- Insurance Fund. An insurance fund safeguards your account when your equity is less than zero or the collateral currency borrowing orders assets are insolvent.
- Cooling-off Period. Margin trading has implemented a cooling-off interval mechanism to assist traders in avoiding excessive trading.
- Security. The risk fund safeguards your digital assets against any threats.
There are four essential steps to perform Binance Margin Trading:
- Transfer assets
- Borrow on your Margin Account
- Trade using your Margin Account
- Repay your borrowings
What is the Binance Margin Quiz About
Binance is one of the best crypto exchange platforms for margin trading, that’s why a lot of traders invest in it. This Binance Margin Quiz tests your knowledge of margin trading on the Binance platform. This prepares you and other traders for what may come when performing such a trade.
Prior to creating a margin trading account, Binance requires you to get all the answers right. By doing so, you can prove to Binance that you understand the network’s terms and conditions and Binance margin rates, liquidation, and other related aspects.
The next portion of this article will provide you with the exact quiz questions asked and their answers. If you’re interested, we’ve also provided a brief explanation for the answers. Read about them to prepare yourself for the quiz.
Tips for Margin Trading
When you buy stocks, you are essentially buying a piece of a company that will be worth more in the future. When you sell stocks, you are selling that piece of the company for a profit.
With margin trading, you are using leverage to buy or sell stock. This means that you are borrowing money from a broker to purchase shares. You can use the margin to trade stocks, options, index futures, and even cryptocurrency.
When it comes to margin trading, there are a few things you need to keep in mind in order to be successful.
- Consider using stop-loss orders when margin trading. This will help you limit your losses in the event that the market moves against you.
- Don’t be afraid to take profits when they present themselves. There’s no need to wait for the perfect time to sell, as markets can quickly turn against you and erase any gains you’ve made.
- Keep an eye on the interest rates. You will be charged interest on the money you borrow, so make sure it is worth it.
- Have a plan for when/if things go wrong. If your trade does not go as planned, you could be left with a large debt and no way to pay it off
- Make sure you fully understand the risks before entering any margin trade.
It’s essential to monitor your account balance when margin trading, as you may need to deposit additional funds if the value of your account falls below the minimum required by your broker. That said, we believe these tips should help you approach margin trading in a more informed and cautious manner, which will increase your chances of success.
We hope this article has helped you better understand the Binance Margin Quiz Answers 2023. Knowing how to answer these questions correctly is essential if you want to be successful in trading on the margin on Binance. By carefully studying the best practices outlined here and making sure that you are always up-to-date with the latest news about cryptocurrency and blockchain technology, you can ensure that your ventures into Binance margin trading will be as profitable as possible
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