# Limits #### **What is a trading limit?** We do not require full pre-funding; thus, you are able to sell an asset without owning it (short selling). However, you can only do it within a trading limit. During the onboarding, we assess your financials and establish an appropriate trading limit. Our default limit starts from 100K EUR. #### **Do I need to post collateral?** In some cases, we require a partial prepayment to guarantee the future settlement (i.e., collateral). For instance, if we agree on a trading limit of 1M EUR, you will need to send us 250K EUR. #### **Can I get my prepayment back?** Yes, of course. If you have changed your mind and have not made a trade, you can get the prepayment back at any time. However, please bear in mind that your limit will be reduced accordingly. #### **How much prepayment do you require?** Depending on your financial situation, FinchTrade will ask for 0-30% of the gross limit. For example, if the gross limit is $1M, then the pre-funding will be $200-300k. (You can learn more about open positions & limits [here](https://faq.finerymarkets.com/platform-overview)). #### **Should I have a prepayment for each trading pair separately?** No need to have a prepayment per asset (in contrast to centralised exchanges). For example, you may send us USD to be able to trade ETH/BTC. #### **Do you provide any credit?** You can sell short without coverage (e.g., even if you do not have BTC, you can still sell BTC). However, all trading is done within trading limits. We always ask you to settle first. If you have bought 10 BTC for 500K EUR, you will need to deliver euros first, and then we will send you bitcoins. It helps us better manage our counterparty (credit) risks. It also means that, consequently, we pose less risk to you. #### How does FinchTrade calculate my available margin? We calculate your margin level continuously as market prices change. It's based on your equity (sum of all balances in USD) adjusted by risk haircuts — small discounts on volatile assets. For example, if you hold BTC, we may value it at 95% for risk purposes (5% haircut). The formula: risk-adjusted equity ÷ risk-adjusted short positions = margin level. You can see your current risk-adjusted equity in the Web UI. #### What are haircuts? Haircuts are per-asset risk adjustments. A long haircut reduces the collateral value of assets you hold (e.g., BTC with 5% haircut: $100K valued at $95K). A short haircut increases the value of assets you owe (e.g., if you owe $100K of an asset with 5% short haircut, it counts as $105K). Stablecoins and fiat typically have 0% haircuts. #### What happens if I exceed my limits? You are not locked out entirely. The system still allows trades that improve your risk profile — for example, selling an asset to reduce your short exposure. However, trades that would worsen your position are rejected until you deposit funds or your margin level recovers. #### Can I withdraw funds at any time? Withdrawals are allowed as long as your margin level remains above the withdrawal margin requirement after the withdrawal. The system simulates the post-withdrawal state before approving. Pending withdrawals reduce your available collateral immediately. #### What is max exposure? Max exposure is a hard USD cap on your total risk-adjusted short positions. Even if your margin level is healthy, trades that would push your short exposure above this limit are rejected. This is set during onboarding alongside your trading limit. #### **Could you bump up the limit in case of network delays?** In rare cases when there is a network delay or a similar situation, FinchTrade can increase limits temporarily to enable uninterrupted trading. #### **How much liquidity is visible in the order book?** It depends on the trading channel that you prefer. * If you trade with us using our native GUI or API, you will see all available liquidity but you will be able to trade only within limits. * If you trade with us via Finery Markets, the visible liquidity depends on the limits that we have agreed upon. If your trading gross limit is $1M, you will be able to see liquidity of $1M in all order books ($1M ask orders and $1M bid orders). If you then buy some BTC for $150k USDC, you will be able to see liquidity of $850K in all order books (= $1M - $150k). If you then settle this position (you send $150k USDC and get BTCs), you will again see $1M liquidity.