Introduction to Margin
In VOOX perpetual futures, a certain amount of margin is required for opening a position. In the process of margin trading, it is crucial to pay attention to the following points:
1 Opening margin
The opening margin includes the initial margin and the opening loss.
Initial margin refers to the minimum amount of margin required to open a position. Additionally, the initial margin rate (position value / position margin) also reflects your leverage multiplier.
Opening losses occur when the futures contract price moves unfavourably (that is, the mark price is lower than the order price of the long order). Incorporating opening losses into the cost of opening a position can help prevent forced liquidation when traders place orders. If the opening loss is not included in the cost of opening a position, users’ positions are likely to be liquidated immediately when they place an order.
2 Average opening price
When an open position occurs, the average price of the open position is recalculated.
Example: Trader A now holds multiple positions of BTCUSDT long position 0.5, opening price of 5000 USDT. An hour later, Trader A decides to open an additional 0.3 position at 6,000 USDT.
Below are the formulas and calculation steps for the average opening average price:
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Average open price = USDT total contract value/total contract quantity
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Total contract value in USDT= [ (contract quantity 1 * price 1) + (contract quantity 2 * price 2)...]
We obtain the following data based on the example:
Total contract value in USDT= [(Contract quantity 1 x price 1) + ( contract quantity 2 x price 2)] = [ (0.5 x 5000) + (0.3 x 6000) ] = 4300
Contract total quantity = 0.5 + 0.3 = 0.8 BTC
Average opening price = 4300 / 0.8 = 5375
3 Position (Notional Value)
The position notional value represents the market value of your position, denominated in USDT.
VOOX adheres to a tiered margin model approach for risk management. The maximum leverage is
determined based on your position's notional value. To mitigate the potential risks associated with
high leverage, the larger your position notional value, the lower the maximum leverage.
Position (Notional value) = Mark price x Position amount
4 Maintenance Margin
Maintenance margin refers to the minimum amount required to keep the position from being liquidated. In futures trading, if the account balance falls below this level, the position may be subject to liquidation.
Maintenance margin is intended to protect exchanges and traders from possible losses. When the market moves against the position holder and the account margin is insufficient to maintain the position (i.e., when the current maintenance margin ratio (MMR) falls to 100% or below), liquidation will be triggered to close part or all of the position to avoid further losses.
Margin Calculation
In perpetual futures, margin refers to the order cost required to open a position. The actual trading fee is ultimately determined by the manner in which the order (type) is executed.
1 Opening Margin Calculation
Opening Margin = Initial Margin + Opening loss
Initial Margin = Notional Value / Leverage
U-margined nominal value = order price * quantity * contract size
Opening loss: U-margined opening loss = quantity * contract size * abs {min[0, order direction * (mark price - order price)]}
Order direction: 1 represents a long order; -1 represents a short order
Example:
U-margined contract. The price is 60000. Open long 10000 BTCUSDT contracts. The contract size is 0.0001BTC, 10X. The mark price now is 55000.
Initial Margin = 60000*10000*0.0001/10 = 6000
Opening loss = 10000*0.0001*5000 = 5000
Opening margin = 6000+5000 = 11000
2 Maintenance Margin Calculation
Maintenance margin is calculated based on your positions (notional value) within the tiers. This calculation remains consistent within a given tier, regardless of the chosen leverage. The larger the position, the higher the maintenance margin rate. The required maintenance margin in futures trading is calculated using a tiered algorithm. For more details on tiered maintenance margin, please visit the webpage: Ladder Maintenance Margin Rate
Maintenance margin = Position (notional value) * Maintenance margin rate
Profit/Loss Calculations
After opening a position, the position and its profit and loss can be seen in real time in the position area.
Depending on the direction of your trade, the formula for calculating profit and loss is slightly different.
1. For Long Position
Example:
Trader B now holds multiple positions of BTCUSDT long position 0.2, opening price of 7000 USDT. When the latest market price in the order table is shown as 7,500 USDT, the unresolved profit and loss is displayed as 100 USDT.
Profit/loss= Contract quantity x (marked price - average opening price) = 0.2 x (7500 - 7000) = 100 USDT
2. For Short Position
Example:
Trader C now holds a short position of BTCUSDT short position 0.4, opening price of 6000 USDT. When the latest market price in the order table is shown as 5,000 USDT, the unresolved profit and loss is displayed as 400 USDT.
Profit/loss= Contract quantity x (average opening price - marked price) = 0.4 x (6000 - 5000) = 400 USDT
Risk Disclaimer
Cryptocurrency prices are subject to high market risk and price volatility. You should only invest in products that you are familiar with and where you understand the associated risks. You should carefully consider your investment experience, financial situation, investment objectives and risk tolerance and consult an independent financial adviser prior to making any investment. This material is for reference only and should not be construed as financial advice. Past performance is not a reliable indicator of future performance. The value of your investment can go down as well as up, and you may not get back the amount you invested. You are solely responsible for your investment decisions. VOOX is not responsible for any losses you may incur.
VOOX attaches great importance to compliance and has strictly abided by local regulations. Please obey local laws and regulations in your country or region. VOOX reserves the right in its sole discretion to amend, change, or cancel this announcement at any time and for any reason without prior notice.
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