In contract trading, the initial margin is the collateral amount needed to open a position. The amount of initial margin is influenced by the position size and leverage. Higher leverage requires less initial margin; larger positions require more initial margin.
Coin-Margined Contracts (Reverse Contracts):
- Initial Margin = (Position Size × Contract Value) / (Leverage × Entry Price)
Example:
A trader using 25x leverage submits a limit order of 10,000 BTCUSD at a price of 30,000. With a contract value of 1 USD per contract, the initial margin is:
- Initial Margin = (10,000 × 1) / (30,000 × 25) = 0.0133 BTC
Commission Cost:
- Coin-Margined Contracts (Reverse Contracts): Commission Cost = (Position Size × Contract Value) / (Leverage × Entry Price)
- USDT-Margined Contracts (Forward Contracts): Commission Cost = (Entry Price × Position Size × Contract Value) / Leverage
Example (Reverse Contract):
A trader using 25x leverage submits a limit order of 10,000 BTCUSD at a price of 7,000, with a contract value of 1 USD per contract. The margin is:
- Initial Margin = (10,000 × 1) / (7,000 × 25) = 0.0571 BTC
Example (Forward Contract):
A trader using 25x leverage submits a limit order of 10,000 BTCUSDT at a price of 7,000, with a contract value of 0.0001 BTC per contract. The margin is:
- Initial Margin = (7,000 × 10,000 × 0.0001) / 25 = 280 USDT
*The margin under the cross position mode includes the initial position margin and available assets.
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