OOKI makes DeFi fully decentralized margin trading easy for novices. Users can enter long or short margin positions with up to 15x leverage. Trading positions are managed through the Ooki Trading Interface. Unlike centralized exchanges, on fully decentralized exchanges like Ooki, users retain custody of their funds.
Margin trading has two main aspects: leverage and shorting. When trading with leverage, a trader borrows assets to increase the amount of assets they are trading. By doing so, traders magnify the gains or losses of their trade.
The borrowed assets in a margin trade are known as a margin loan. To obtain the margin loan, the trader puts up assets that serve as collateral. The terms of the margin loan specify a collateral-to-loan ratio. If the trade falls below the specified ratio, the trade is liquidated and the lender gets repaid using the trader's collateral.
Margin trading also includes shorting. When shorting, a trader essentially sells assets they do not own. The short investor borrows an asset and sells it with the expectation that the asset will lose value, and profit from the difference between the margin short entry price and the short cover price.
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