Though CEX.IO Broker has been around for a while, its availability in invite-only format did not really allow for proper introductions to the world. Our beta testers – to who we are eternally grateful for being early with us – understood the nature of the margin trading platform. For the rest of the people, it would be unreasonable to tease the product if they could not put their hands on it.
It is like when you start dating someone, you first try to keep things under the cover. You do not want too much attention to your new relationship, so you can get it right while it’s in the initial stages. At some point though, it begins getting serious so that you are ready to take it to the new level. You want to update your Facebook status, have your new partner meet your family and friends, and all that!
Similarly, with CEX.IO Broker: for a while, we’ve been working quietly on it on the background. And things are about to change right now! As CEX.IO Broker moves from the closed private beta to open public beta, we would like to unveil the curtain and give it a proper introduction to the world. Time to make things official!
Welcome CEX.IO Broker
You know how a resume presents a description of an individual, but, behind it, there is always a story of who that person is? Looking at the resume, you assess the skills. But, if you seriously want to get to know that person, you want to hear the story. So, in this article, we will both provide you the formal description of CEX.IO Broker and we also explain what it all means and how it came to be. With that, take it all in:
CEX.IO Broker is a platform for digital assets margin trading based on Contracts for Difference (CFDs). It offers professional trading tools combined with a simple and flexible interface and top-level security.
And now, to the story. For a while, CEX.IO has been offering margin trading as part of the cryptocurrency exchange platform. At that time, margin trading on crypto exchanges existed in the space not clearly defined from the regulatory standpoint. As we’ve chosen to take the regulated path in our evolution, we needed to rethink both the instrument and the format for providing margin trading services to our users. Hence, margin trading was discontinued and around the same time, the work on CEX.IO Broker began.
The idea was to separate margin trading into a standalone platform with a well-defined instrument while having this platform still tightly connected to CEX.IO Exchange. Hence, CEX.IO Broker became that platform and Contracts for Difference (CFDs) were the basis for margin trading on it.
Though the nature of trading CFDs is principally different from trading on CEX.IO Exchange (see below), the two platforms are still connected. In addition to having some of the same people talents powering both platforms, CEX.IO Exchange and CEX.IO Broker share the unbreakable bonds: the same login and the same custodial wallet. That means, there is no need to create a separate account for CEX.IO Broker – you can switch between the interfaces without logging out. That also means moving funds between the two platforms is instant and free. Literally like transferring money from your left pocket to right!
In practice, this setup provides a lot of flexibility to fund both your spot trading and margin trading strategies out of a single wallet (more on that later!).
Contracts for Difference
Contracts for Difference (CFDs) form the basis for margin trading on CEX.IO Broker. CFD is a financial instrument allowing traders to trade in price movements of an asset without actually owning, buying, or selling that asset. With CFDs, a trader opens positions anticipating the movements of an asset price and then gets the difference between the position closing and open prices as a profit or a loss.
CFDs are traded on leverage. That means the capital required to open a position of a specific size is smaller than the position size itself. Opening a position, a trader posts collateral for the portion of a position size (called Used Margin) which serves as a guarantee for the credit given to a trader by the platform to open a position.
A Long position means a trader expects the price of the underlying asset will go up. A Short position means a trader expects the price of the underlying asset will go down. Over time, as the price moves in the desired direction, the position becomes profitable. On the other hand, if the price moves in the adverse direction, the position turns into a money-losing.
A position in CFDs can move from profitable to money-losing a few times while it’s open. It does not have a predetermined time when it closes or expires (unlike in futures). For as long as its value remains above a certain predefined level (certain Margin Level) and for as long as a trader is willing to pay a rollover fee, the position can stay open waiting for a more opportune moment to be closed.
Since CFDs’ value is based on the value of other assets – Bitcoin, Ethereum, and others, CFDs represent a type of derivatives. And, since no actual assets are exchanged on a CFD-based platform, CEX.IO Broker is quite different from the spot market on CEX.IO Exchange.
On the spot market, if you have dollars, the only thing you can do is buy a digital asset and wait for the price to go up. So you need to own an asset to benefit from the price change. Similarly, if you see some clear indicators of the price going down, to take advantage of that, you need to own that asset and sell it to buy it back cheaper.
It’s different with CFDs: if you have BTC, for example, you can establish positions both in anticipation of its price going up and its price going down. That means you can benefit from an asset’s bull trend (rising price – as bull attacks by lifting its horns upward!) and bear trend (falling price – as bear attacks with paws in downward motion!) on the market. More so, you can establish positions with BTC but trade non-BTC pairs and benefit from the price movements of other assets.
Here’s the CFD mechanics in a bull or a bear market on the graph:
Who is CEX.IO Broker for?
CEX.IO Broker welcomes people from different walks of life and levels of experience. The platform provides access to the professional trading environment while the interface remains intuitive and easy to navigate.
Our users are:
- Crypto enthusiasts who are adding extra income to their regular employment (doctors, teachers, mathematicians, store managers, business owners, and others), by making smart trading choices;
- Curious individuals passionate about learning new instruments, identifying new opportunities, experimenting with new strategies, and being at the forefront of the new markets;
- Full-time crypto traders who need trading flexibility, reliable funding and withdrawal methods, built-in analytics tools, and advanced exposure management;
- Forex traders who already mastered similar tools in the traditional markets and now look to expand to the exciting cryptocurrency industry and capture the opportunities there;
- Investment managers who maintain portfolios of digital assets and want to hedge some of their positions using capital-efficient derivatives.
And while we equally embrace cat lovers and dog lovers, coffee drinkers and tea drinkers, early birds and night owls alike, CEX.IO Broker is not for everybody. Margin trading is inherently risky. Knowledge about leverage mechanics, cryptocurrencies, financial tools, and risks involved is important to successfully use CEX.IO Broker.
Our users keep a close eye on the market trends, they are aware of their risk appetites, and they know well that they cannot always win in trading. These people have the patience to learn and willing to practice to get somewhere. If that sounds like you, CEX.IO Broker might be right for you too.
On our side, we are committed to growing the Knowledge Base to help our users learn the main concepts, definitions, instruments, and tools in trading.
What’s Good about CEX.IO Broker?
In recent months, there have been a lot of margin trading platforms that sprung to life. CEX.IO Broker differs from other players in some important ways. Its simplicity and rich functionality give traders more flexibility to design strategies and manage their risks. Backing from CEX.IO provides efficient payment options and serious infrastructure for platform security.
Unlike many other platforms, CEX.IO Broker allows traders to maintain multiple trading accounts (i.e. subaccounts within one user account). Separate accounts can be used for different strategies and trading styles. Each account has its isolated Profits and Losses that do not affect the financial results of other accounts. In other words, losses generated on one trading account do not eat up profits on the other account.
Within one trading account, things are different. To capture opportunities in the market, a trader can open multiple positions at the same time, even with the opposite directions (longs and shorts) and with different base currencies.
Inside a trading account, gains on one position can satisfy margin requirements (the Margin Level we mentioned above) for the other position. This way, should things go south for one position, the gains of other positions in the same trading account may keep the margin requirements in a good shape to wait out the adverse price movement and to avoid the liquidation.
Finally, you can deposit one currency to a trading account (for example, BTC) and still trade all the available pairs on the platform that do not even have that currency in the quote (e.g. ETH/USD). That’s some good flexibility!
Backing from CEX.IO
Being a part of the CEX.IO ecosystem, CEX.IO Broker also adheres to the highest standards of security and customer support. Moreover, it uses the same account system so you can switch between your CEX.IO Exchange and CEX.IO Broker accounts without needing to log in again.
Moving funds between the two platforms is a matter of an instant and free transfer. This kind of flexibility, when you can quickly fund your derivative and spot market strategy out of one wallet, is key in the fast-paced cryptocurrency markets!
Overall, with CEX.IO Exchange behind CEX.IO Broker, you are dealing with the team that has been in the cryptocurrency industry from 2011, run the cryptocurrency exchange from 2013, and has served millions of customers across the globe. Reputation and customers’ trust are at the core of our business, and we take both of them seriously.
Voices behind CEX.IO Broker
We’ve already given the spotlight to some of the CEX.IO Broker team members of in the previous two articles:
- What’s up with CEXBro, Bro, Part 1. Behind the scenes of building CEX.IO Broker, a new margin trading platform. The article provides an overview of the platform’s useful features by the support team, who’s been with CEX.IO Broker from the very start.
- What’s up with CEXBro, Bro, Part 2. Understanding margin trading platforms: not-so-obvious but crucial aspects. Our technical team gives insights on why platforms with identical functionality can give very different experiences to traders. It also offers some thoughts on liquidity and order execution logic.
We look forward to bringing more interview-style articles to help you understand the derivative markets better. Our team members are excited to share their experience, expertise, and unique perspectives. And, if you like the bite-sized information, from traders’ vocabulary to technical analysis, join hundreds of other people learning about trading in our Telegram Channel: https://t.me/CEXIOBroker!
Go CEX.IO Broker!
CEX.IO Broker comes as a nice addition to the CEX.IO family. It augments the ecosystem by providing CEX.IO users access to margin trading and derivatives. CEX.IO Broker successfully serves the needs of both already accomplished professionals and those who want to try themselves at trading.
As in any family, the youngest member is usually ambitious, fast-growing, and open to many directions to develop. Dubbed as CEXBro, CEX.IO Broker is certainly more daring than the older sister, CEX.IO Exchange. At the same time, it almost definitely shares the same serious DNA!
We are excited to see CEX.IO Broker grow with more users, more instruments, more markets. And we cannot wait to see what YOU can do with it! Long life, CEX.IO Broker!