1. What is Margin?

 

In the cryptocurrency contract market, traders only need to deposit a small amount of funds as collateral, based on the contract price, at a certain ratio to participate in contract trading. This collateral is called the cryptocurrency contract margin.

In BTCC's USDT-margined Perpetual Contract Pro, users can trade in either Isolated Margin Mode or Cross Margin Mode, with different treatments for position margin and available assets. Users can choose according to their trading strategy or risk preferences.

 

2. How is Margin Calculated?

 

BTCC provides two margin systems: Cross Margin and Isolated Margin.

1. In Cross Margin Mode, all available funds in the Cross Margin account are considered available margin.
   
   
   • Position Margin Calculation
     
     • USDT-Margined Contract Margin Calculation:
       Initial Margin = Contract Size * |Contract Quantity| * Contract Multiplier * Mark Price / Leverage,
       The initial margin will fluctuate as the price of the traded asset changes.
       
       
2. In Isolated Margin Mode, each position's margin is calculated independently, and the profit and loss of each position do not affect others.
   
   
   • USDT-Margined Contract Margin Calculation:
     Opening Margin = Contract Size * |Contract Quantity| * Contract Multiplier * Opening Price / Leverage,
     The initial margin remains fixed and unaffected by price changes.
     
     

3. The Relationship Between Margin and Leverage

 

Leverage is a common financial trading system based on margin. It amplifies the trading amount, but it also increases both potential returns and risks.

For example, in Cross Margin Mode, when a user opens a position with a certain number of contracts, the Initial Margin = Position Value / Selected Leverage.

Example:
USDT-margined Contract
Assume the current BTC price is 10,000 USDT/BTC. A user wants to use 10x leverage to go long 1 BTC equivalent of a perpetual contract.
The user’s position size = Long BTC Quantity / Contract Size = 1 / 0.0001 = 10,000 contracts.
Initial Margin = Contract Size * Quantity * BTC Price / Leverage = 0.0001 * 10,000 * 10,000 / 10 = 1,000 USDT.

 

4. Margin Rate

 

Maintenance Margin: The minimum margin required by a user to maintain an existing position.

1. Cross Margin
   Position Margin Rate = (Margin Balance + Profit) / Σ(Contract Size * |Contract Quantity| * Mark Price * (Maintenance Margin + Liquidation Fee))
   If there are multiple positions in different contract types, the required maintenance margin and liquidation fee are summed in the numerator.
   
   
2. Isolated Margin
   Position Margin Rate = (Margin Balance + Profit) / (Contract Size * |Contract Quantity| * Mark Price * (Maintenance Margin + Liquidation Fee))
   Each position is calculated independently, without affecting others.
   
   

5. What is Margin Call?

 

A Margin Call is unique to Isolated Margin Mode. Users can increase the margin for specific positions to control risk.

 

6. Adjusting Position Leverage

 

BTCC’s digital asset contracts offer the function to adjust position leverage. When users wish to increase leverage, the system checks if the adjusted leverage is within the maximum leverage for the current contract size. If successful, the required margin for opening the position will decrease. When users reduce leverage, the required margin for the position will increase. If the system detects enough available balance for margin adjustment, the leverage change will be successfully executed.

 

Disclaimer

 

This content is for reference only. It does not provide any investment, tax, or legal advice and should not be construed as an offer to buy, sell, hold, or provide any services related to digital assets. Holding digital assets involves high risks and may fluctuate significantly. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation, especially when considering using leverage. For specific circumstances, please consult with your legal/tax/investment professionals. You are solely responsible for understanding and complying with applicable laws and regulations in your jurisdiction.