Bybit Margin Trading: A Complete Guide to Leverage & Risk

Trading with borrowed money magnifies everything. Wins feel huge, losses sting harder, and that double edge is what draws traders in. Bybit margin trading taps into that potential by letting you amplify positions while giving you tools to keep risk in check.

In this guide, we’ll break down how margin trading works on Bybit and the key things to know about leverage, fees, benefits, and risks. You’ll also see how Bybit supports traders with flexible margin modes so you can trade with more confidence.

Did you know?

Want to get smarter & wealthier with crypto?

Subscribe - We publish new crypto explainer videos every week!

Can Russia Use Crypto to Bypass Sanctions? (Animated)

SUBSCRIBE

ON YOUTUBE

What is Bybit Margin Trading?

Margin trading is the practice of using borrowed funds to trade bigger positions than your balance would normally allow.

It can amplify profits if the market moves your way, but it also magnifies losses if it doesn’t. That double-edged nature makes margin trading both powerful and risky.

Think of it like trading Bitcoin with borrowed funds. Let's say you put up $1,000 of your own money and borrow another $9,000, giving you $10,000 to trade.

If Bitcoin climbs 5%, your position is now worth $10,500. That’s a $500 profit on just $1,000 of your own capital. But if Bitcoin drops 5%, your position loses $500 just as quickly, and that loss is magnified against the small amount you initially invested.

While margin trading boosts both gains and losses, it also helps crypto markets discover prices faster and stay liquid,^[1] especially in volatile conditions. Bybit’s margin setup taps into this dynamic, giving traders tools to act quickly when markets move.

Bybit margin trading finds a home in its Spot and Futures markets. The platform allows you to borrow assets by collateralizing your crypto and then using those borrowed funds to trade. This approach is designed to give traders more flexibility, whether markets are calm or moving fast.

Aside from integrating the margin trading directly with Spot and Futures trading, Bybit also offers options like the Isolated VS Cross Margin and the Unified Trading Account (UTA). These options provide more control over how you manage capital and risk.

Next, let’s break down the two main types of margin trading on Bybit: Spot Margin and Futures Margin.

📚 Read More: What is Spot Trading in Crypto?

Spot Margin VS Futures Margin on Bybit

Bybit offers Spot Margin and Futures Margin, where both let you trade with borrowed capital with slightly different mechanics and strategies.

In Spot Margin, you borrow assets directly from Bybit and repay them later with interest. For example, if you believe Ethereum will drop in price, you can borrow ETH, sell it at today’s price, and aim to buy it back cheaper later.

If the trade works, you keep the difference after repaying the loan. Spot Margin feels similar to regular Spot trading, but with borrowed funds added.

Futures Margin takes a different approach. Instead of borrowing coins, you post collateral (usually USDT) and open a contract that mirrors the price of the trading pair. Here, you’re not buying or selling the asset itself, but trading a derivative that tracks its movement.

The choice between Spot Margin and Futures Margin comes down to what you want from a trade. Spot Margin is often favored by traders who want direct ownership of assets, longer-term positions, or simple short-selling.

Futures Margin is better suited to those who want high leverage, complex strategies, or the ability to profit from volatility without holding the underlying asset.

It’s also worth noting the difference in costs. Spot Margin comes with borrowing interest, which ticks up by the hour. Futures contracts don’t have this borrowing cost, but they come with funding rates^[2] and stricter liquidation thresholds.

📚 Read More: Bybit Futures Trading

Understanding Leverage on Bybit

Leverage is what makes margin trading attractive, but it’s also what makes it risky. In simple terms, leverage is a multiplier on your capital.

For example, at 2x leverage, your $1,000 balance controls $2,000 worth of crypto. At 10x, that same $1,000 stretches into $10,000. Bybit offers up to 10x on Spot Margin and up to 100x (sometimes 125x) on Futures contracts.

To see how this plays out in practice, here’s a simple breakdown of how profits and losses change with different levels of leverage:

Table: Bybit leverage details from position size to outcome

The table shows just how quickly leverage changes the game. At lower levels, losses are manageable and give you room to recover. Once you start pushing into double digits, small price moves have an outsized impact: both good and bad.

The Most Liked Findings

Looking for more in-depth information on related topics? We have gathered similar articles for you to spare your time. Take a look!

Cryptocurrencies

Is Kraken Safe? A Thorough Analysis

Cryptocurrencies

How to Buy CARDS Token: A Complete Guide to Pokemon Cards in Crypto

Exchanges

Binance Taxes in 2025: A Complete Guide

Bybit Margin Trading: Benefits and Risks

The table shows how leverage can swing outcomes fast, but that’s only part of the story. Bybit margin trading also comes with tools and features that shape how you manage risk. So to trade confidently, it’s worth looking at both the benefits and the risks side by side.

Benefits

Bybit gives traders a set of features designed to make margin trading more flexible and efficient. These are the key benefits worth noting:

• High leverage options. Up to 10× on Spot and 100×+ on Futures.
• Flexible margin modes. Isolated, Cross, and Portfolio Margin for different risk profiles.
• Unified Margin Account. One balance across Spot and Futures.

• Deep liquidity. Large order books reduce slippage.
• Risk management tools. Stop-loss, take-profit, and real-time margin ratio tracking.
• Competitive fees. Low spot fees and discounted rates for VIPs.

All of these benefits make Bybit appealing to traders who want more control, more leverage, and a smoother experience compared to many competitors.

Risks

The benefits are real, but so are the risks. Bybit margin trading carries some serious downsides every trader needs to factor in:

• Liquidation risk. Leverage amplifies losses, and liquidation can happen quickly.
• Borrowing costs. Interest accumulates hourly on Spot Margin borrowings.
• Margin calls. Falling below the maintenance margin triggers forced action like partial or full liquidation of your position.

• Complexity. Not suitable for complete beginners since it requires discipline and risk management.
• Restrictions. Some regions or users without KYC can’t access the full features.

These risks don’t mean you shouldn’t use Bybit margin, but they do mean you should approach it with caution. The more aware you are of what can go wrong, the better prepared you’ll be to protect your capital.

Bybit Margin Trading Fees

Trading on margin comes with three main costs: trading fees, interest on borrowed funds, and liquidation fees. Each of these works a little differently, and together they shape the real cost of leveraged trading on Bybit.

Did you know?

Want to get smarter & wealthier with crypto?

Subscribe - We publish new crypto explainer videos every week!

How to Make Passive Money with NFT? (Explained!)

SUBSCRIBE

ON YOUTUBE

Trading Fees

Whenever you buy or sell a leveraged position on the Spot market, a trading fee is applied. The structure is identical to regular Spot trading, which keeps things simple. To calculate the fee, Bybit uses a straightforward formula:

Trading Fee = Filled Order Quantity × Spot Trading Fee Rate

For non-VIP users, the rate is set at 0.1% for both makers and takers. Higher VIP tiers unlock lower fees, which can make a real difference for active traders.

To put it in numbers: if you place a leveraged buy order for 2 ETH at $2,000 each, your order value is $4,000. With a 0.1% fee, the cost comes out to $4. For high-frequency traders, these fees can add up, which is why many aim for VIP tiers where discounts kick in.

📚 Read More: Bybit Fees

Interest on Borrowed Funds

When you borrow to trade with leverage, interest begins right away. It is charged hourly and depends on both the asset you borrow and your account tier. Even if your order has not been filled, interest continues until you repay the loan.

For example, borrowing 10,000 USDT for two hours at a 0.02% daily rate would cost about 0.167 USDT. The longer the funds are borrowed, the more the interest compounds, which is why margin traders often keep a close eye on timing.

Liquidation Fees

If your margin ratio falls too low and Bybit liquidates your position, a liquidation fee comes into play. The rate is fixed at 2% of the liquidated value, and the fee goes straight into Bybit’s insurance fund. This fund acts as a safety net to cover losses if accounts fail to repay what they owe.

Together, these three charges form the structure of Bybit margin trading fees. It is transparent and predictable, which gives you the information you need to weigh potential profits against costs before placing a leveraged trade.

Who Can Trade Margin on Bybit?

Margin trading on Bybit is open to eligible users, but there are a few requirements to meet before you can start borrowing funds:

• Enable Spot Margin by entering the Spot market. The first time you do, a short guide will pop up to make sure you understand the basics and risks.
• Open a Derivatives account or UTA if you want to trade Futures or Perpetual contracts.
• Complete KYC verification to unlock higher borrowing limits and additional features.

• Follow regional rules, since margin trading isn’t available in certain places such as the United States, Canada, and Singapore.

If you meet these conditions, you’ll have access to Bybit margin trading features. The setup process ensures that traders understand the mechanics and risks before using leverage.

How to Margin Trade on Bybit?

By now, you already know the basics of margin trading on Bybit. So let’s get into the practical side: how to actually do spot margin trading on Bybit. The process starts with opening a margin account.

How to Place a Spot Margin Order?

I’ll assume you already have a Bybit account. If not, you’ll need to sign up first.

Once you’re in the order screen, the process feels familiar. You’ll choose whether to go long (buy) or short (sell), decide on the order type, and set your price or trigger level.

To stay on the safe side, it’s best to start with smaller orders until you’re comfortable with how margin trades work in real time.

How to Transfer Funds on Bybit Margin?

Always transfer only the amount you’re comfortable putting at risk. Keeping extra funds in your Funding Account instead of your Margin Account gives you a buffer and makes it easier to manage risk if the market moves fast.

When you're ready to move funds, the process is quick and straightforward:

Your asset will now appear in the account and is ready for borrowing or trading.

Pros

• Secure and reliable
• Accepts fiat currencies
• Lots of trading options

Main Features

• Reputable exchange
• Accepts fiat currencies
• Offers various trading options

Visit Site

Pros

• Beginner-friendly
• Secure
• Decent trading and withdrawal fees

Main Features

• Crypto.com Visa Card
• Automated tools & bots
• Ecosystem synergy with CRO

UP TO 1 BTC IN CRO

Pros

• Accepts fiat currencies
• Simple to use
• Supports only trusted cryptocurrencies

Main Features

• A leading cryptocurrency exchange platform
• Best for all type investors
• Accepts fiat currencies

GET $200 REWARD

How to Place Long/Short Orders With Margin?

Once your collateral is set up and borrowing is enabled, placing a margin order feels very similar to Spot trading. The main difference is that you’re trading with borrowed funds, which amplifies both profits and risks.

Placing Long Orders

Going long means you expect the price of a coin to rise. With margin trading, you can borrow USDT to buy more of that coin than your balance alone would allow. Let’s take a look at a quick example:

• Trading pair: BTC/USDT;
• BTC price: 50,000 USDT;
• Leverage: 5×;
• Your balance: 10,000 USDT.

If you were to place a long order, here’s how it could play out:

1. You decide to buy 1 BTC at 50,000 USDT.
2. Bybit automatically lends you 40,000 USDT.
3. Adding your own 10,000 USDT, you now control 1 BTC worth 50,000 USDT.
4. Two days later, BTC rises to 52,000 USDT.
5. You sell the BTC, repay the 40,000 USDT loan, and keep 2,000 USDT profit (before fees and interest).

This simple example shows how going long with margin can magnify your gains, but remember the same leverage can just as easily magnify losses if the market moves against you.

Placing Short Orders

Going short means you expect the price of a coin to drop. Instead of borrowing USDT, you borrow the coin itself, sell it at a high price, and aim to buy it back at a lower price. Here’s a quick example:

• Trading pair: BTC/USDT;
• BTC price: 50,000 USDT;
• Leverage: 5×;
• Your balance: 10,000 USDT.

Now, here’s how it works:

1. You short 0.8 BTC at 50,000 USDT.
2. Bybit automatically lends you 0.8 BTC to sell.
3. Two days later, BTC drops to 48,000 USDT.
4. You buy back 0.8 BTC for 38,400 USDT.
5. After repaying the borrowed BTC, you keep 1,600 USDT as profit (before fees and interest).

Shorting with margin allows you to profit in falling markets, but keep in mind that if the price rises instead, losses can mount quickly.

📚 Read More: How to Short Crypto

Margin trading is about opening positions while watching your risk. Bybit also shows you a Margin Ratio, which measures how close you are to liquidation.

At 100%, your position is automatically liquidated. You’ll also see your Liquidation Price, which updates in real time as the market moves. Plus, you can use Bybit's take-profit and stop-loss orders, which I'll go over later.

Bybit Trading Modes & Tools

Bybit offers several ways to manage margin, and the choice of mode can change how much capital you risk and how efficiently you use it. All of these modes fall under the Unified Trading Account (UTA).

Bybit's UTA is built for efficiency. Instead of tracking margin for every single trade, it manages margin at the account level. Here are the trading modes at a glance:

Table: Overview of Bybit trading modes

In Isolated Margin, only the funds you assign to a position are at risk. If the trade goes south, losses are capped at that amount, leaving the rest of your balance untouched. It’s the safer option when you want to control risk on a single trade.

Cross Margin shares collateral across your whole account. Gains and losses can offset each other, which helps keep trades alive longer and lowers the chance of liquidation. The trade-off is that your entire balance is on the line if things move the wrong way.

Portfolio margin reviews your account as one big position. It factors in how trades interact, so well-hedged setups can use less collateral. This trading mode suits experienced traders who want to put their capital to work without locking it into separate positions.

UTA also supports Single-Asset Mode, where collateral is tied to one asset like USDT, and Multi-Asset Mode, where everything is pooled into USD value for more flexibility.

It’s also worth noting that each mode has its own liquidation process. In Isolated Margin, liquidation is based only on the funds allocated to that position and is triggered if the mark price hits your liquidation price.

In Cross Margin and Portfolio Margin, liquidation risk is assessed at the account level using your Initial Margin Rate (IMR) and Maintenance Margin Rate (MMR). If the MMR reaches 100%, liquidation is triggered across positions.

Finally, Bybit includes a margin calculator that shows your required margin, potential liquidation price, and leverage impact before you place an order. It’s a simple way to understand the risks ahead of time instead of learning them mid-trade.

To access the calculator, simply go to the [Futures] trading page under the [Trade] menu. Once you're on the page, you can click the calculator icon to start using the tool.

The calculator will calculate your margin, profit, loss and ROI, which can help your trading decisions by showing potential outcomes.

Managing Risks on Bybit

Leverage can boost gains, but it also raises the chance of losing your position quickly. That’s why risk management is central to margin trading on Bybit.

The platform automatically calculates a margin ratio, and when it reaches 100%, liquidation is triggered. Bybit traders also watch the informal 50% margin rule, which signals that your position is halfway to forced liquidation.

If your margin ratio is closing to 50%, it’s a sign to add more funds or cut back on your position before things get risky.

Bybit also lets traders set take-profit and stop-loss (TP/SL) orders. These tools help you lock in profits or limit downside without needing to watch the screen constantly. Combined with real-time margin alerts, they give you more control over how much you’re willing to risk.

For a step-by-step walkthrough of placing TP/SL orders, check out BitDegree’s guide on using stop-loss orders on Bybit.

Finally, Bybit keeps an insurance fund on standby to cover losses if liquidations can't fully cover a position. While it doesn’t replace personal risk management, it adds a layer of protection if things get rough.

Bybit VS Binance VS Kraken: Margin Trading Compared

Margin trading looks different depending on the exchange. Bybit, Binance, and Kraken all offer leverage, but they don’t all approach it the same way. Comparing them side by side helps highlight where Bybit stands out and where the trade-offs are.

The table below lays out the key differences in leverage, trading modes, fees, eligibility, and ease of use.

Table: Comparing margin trading on Bybit, Binance, and Kraken

When you line them up, Bybit comes across as the most flexible option for traders who want high leverage, simple tools, and broad access.

Binance margin trading delivers a powerful feature set but can feel overwhelming. Lastly, Kraken margin trading leans toward a more conservative, regulation-heavy approach.

📚 Read More: Best Crypto Margin Trading Exchanges

The Most Trending Findings

Browse our collection of the most thorough Crypto Exchange related articles, guides & tutorials. Always be in the know & make informed decisions!

Exchanges

How to Withdraw Money From Bybit: Fast, Secure, and Error-Free

Cryptocurrencies

A Beginner's Guide on How to Buy BNB

Cryptocurrencies

Best Cosmos Airdrop List for Beginners and Pros

Conclusions

After breaking everything down, it’s clear that Bybit margin trading is both a powerful tool and a responsibility. It lets traders borrow funds to open larger positions, amplify profits, and trade in both rising and falling markets.

Plus, Bybit gives traders the flexibility to choose how they manage risk, from isolated and cross margin to a Unified Trading Account. But they don’t eliminate risks, so the smartest move is to use these tools with discipline and stay cautious even as you scale up.

The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice. BitDegree.org does not endorse or suggest you to buy, sell or hold any kind of cryptocurrency. Before making financial investment decisions, do consult your financial advisor.

Scientific References

1. Black, J., Hossain, J., McFarland, S.: ‘Margin Trading and Price Dynamics on Cryptocurrency Exchanges’;

2. Wang, S., Zhang, T.: ‘Spot-Futures Manipulations in Cryptocurrency Markets’.