Coinbase has added margin trading to its Bitcoin exchange
Just a few random thoughts after looking through their docs.<p>They keep talking about a &quot;margin order&quot;, though they also stress that this order type is basically the same as a limit order.<p>I&#x27;m assuming they created a new order type so the trader is explicitly aware that they are using margin?<p>&gt; Each time a Trader places a valid Margin Order that would exceed their Available Balance, funding is automatically provided for the required amount (Margin Funding).<p>Interesting that each &quot;margin&quot; order you put out counts towards your margin usage, rather than your fills.  I mean, they are both prime broker and exchange, they could cancel out existing margin orders if you hit your margin limit.<p>I&#x27;m guessing this is a nod to simplicity rather than correctness in this case, Seems like it would make layering orders tougher, though maybe its one of those cases that wouldn&#x27;t be hit in practice due to who they are currently allowing to trade on margin?<p>&gt; Each Margin Funding must be Settled within 27 days and 22 hours.<p>That&#x27;s a weird time frame, just short of the shortest month.  This is quite a bit different from typical margin trading that most institutions have with their prime brokers.  It&#x27;s odd that it has an expiry at all.  I&#x27;m guessing its because they aren&#x27;t currently charging any margin interest?<p>&gt; When a portion of your margin funding expires, a market order will be executed to settle only the amount that has expired, and the size of your position will be reduced.<p>Ouch, so if this is marketed towards institutional investors and you put on a say $1,000,000 position, coinbase will cross the spread on your behalf with a market order for the full amount?  You can say buyer beware and maybe they&#x27;ll have some sort of daily and then hourly email reminder but with out knowing more this seems absolutely terrible.<p>&gt; This is the default behavior when closing a position. When you realize profit &#x2F; loss, the opposing market order will be executed for the entire size of your margin position.<p>They can&#x27;t really mean market order can they?  I mean this is 2017, no one should be using a market order for any purpose at all.  If this is indeed the default way that coinbase wants you to close a position, then I&#x27; going to give them the benefit of the doubt and say that I must just be missing something because nobody, should be sending market order.....ever.<p>Requirements for getting a margin account.<p><a href="https:&#x2F;&#x2F;support.gdax.com&#x2F;customer&#x2F;portal&#x2F;articles&#x2F;2725812-what-is-an-eligible-contract-participant-ecp-" rel="nofollow">https:&#x2F;&#x2F;support.gdax.com&#x2F;customer&#x2F;portal&#x2F;articles&#x2F;2725812-wh...</a>