In today’s market, crypto investors need to be able to trade flexibly while protecting themselves in a period of volatile prices.
Bit.com’s Portfolio Margin (PM), exclusive to the exchange, allows our users to manage portfolio risk and trade a range of different crypto assets with unparalleled flexibility.
This is in contrast to a regular margin model, which calculates margin solely on the contract level.
So how does PM work? Our in-house model calculates a metric called the ‘portfolio margin requirement' via a core risk analysis of each user’s portfolio.
This risk analysis includes the simulation of hypothetical profit and loss under a specific set of market conditions.
Specifically, both outright trades and options trading are included in the analysis to ensure a dynamic and accurate reading of individual portfolio risk.
Once the calculation is complete, a user’s margin requirements are then updated accordingly. This provides them with effective risk coverage (particularly against fluctuations in the economic cycle) whilst preserving capital efficiency.
The PM model, in general, tends to favor hedgers. How? By rewarding balanced, lower-risk portfolios with improved capital efficiency.
For bullish traders with more directional portfolios, they have the option not to enable portfolio margin – although we see that as having the potential to increase their risk exposure.
Bit.com is always finetuning its services, making sure we get the best out of every concept, and that’s exactly what we’ve done with the USD PM upgrade. The upgrade means that PM now includes BTCUSD perpetuals and options under the USD margin account, and will support ETHUSD in the near future.
The unique margin system allows Bit.com users to buy and sell crypto options with USD and USDC. This means that they can post collateral in the global reserve currency, building their trades on strong foundations.
In terms of the USD PM upgrade, the required USD margin for each account is now aggregated by the currency pairs present in the portfolio. This is calculated via the PM methodology set out above.
Portfolio Margin, therefore, has helped to remove roadblocks from our users’ trading journey, while providing suitable risk management buffers. The USD PM margin is another exciting leap in this direction.
If you have any further questions regarding Bit.com’s PM, then please reach out to us by filling out the form under ‘Contact Us’.
We look forward to hearing from you and answering any queries about the exchange.