Key Takeaways:
- Spot Margin Trading on Backpack Exchange lets you borrow funds against your existing assets, giving you more buying and selling power.
- With cross-margin, your entire subaccount acts as collateral, keeping your funds flexible while you trade with leverage.
- Need more control? Use individual sub-accounts to manage risk and isolate exposure.
How Spot Margin Trading Works on Backpack
Spot margin trading unlocks leverage by allowing you to borrow funds, unlike regular spot trading where you can only trade with what you own. This lets you increase position size and potential returns—but also comes with the risk of amplified losses. Backpack uses cross-margin by default for better capital efficiency - this means your collateral is shared across all positions in your subaccount, providing flexibility but increasing exposure.
Your existing assets serve as collateral to borrow funds from Backpack’s lending pool. The amount you can borrow is based on your collateral value and chosen leverage level. More collateral means greater borrowing potential. Interest rates are dynamic, based on borrowing demand. Rates adjust as funds are used and are charged continuously. You can check real-time interest rates directly on the Exchange in the Lending page. You can repay borrowed funds manually anytime or enable Auto Borrow Repay, which automatically settles loans using your available balance, streamlining your trading experience.
Why Trade Spot Margin Over Futures?
Spot margin trading lets you capitalize on market opportunities while keeping your core holdings untouched. Borrow, trade, and profit—without liquidating your existing assets. Spot margin trading gives you more size without the complexity of futures contracts. No funding rates, no expiry dates—just straightforward leveraged trading in the spot market, ideal for long-term positions and asset ownership.
Spot margin trading isn’t just for leverage—it’s also a powerful hedging tool. If you own an asset but expect a price drop, you can open a short position to offset potential losses, balancing your risk exposure.
You can also short-sell assets. Borrow, sell high, buy back lower, repay, and profit from the difference—but if the price rises, losses can be significant.
Margin Level & Liquidation Risk
Your Account Margin Factor (AMF) determines how much more you can borrow. If it drops too low, new borrowing stops, and if it hits the liquidation threshold, your positions will be closed automatically to cover losses. A margin call happens when your AMF nears the maintenance threshold. Avoid liquidation by monitoring your margin level, adding collateral, or reducing leverage before it’s too late.
Stay in Control
Monitor your positions in real time via Backpack Exchange’s dashboard. Check your Account Margin Factor, collateral balance, and exposure to stay ahead of potential risks. Trade responsibly—only risk what you can afford to lose.
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