English/USD
Language
Currency
How can we help you?
Support Center
FAQ
Crypto Derivatives
Futures Contracts
Quarterly Futures Contract
Leverage and Margin in Quarterly Futures Contract
Binance
2020-06-11 07:38

Binance allows traders to trade on “BTCUSD Quarterly 0925” up to 125x leverage. The maximum amount of leverage available for users depends on the notional value of their position. Generally, the larger the position, the lower the leverage allowed. Thus, initial margin deposits are calculated using the leverage selected by the trader.

Note that the trader will first select his leverage (and fulfill its initial margin requirement), and then will open his positions. If the trader makes no selection on leverage, it will be set at 20x by default. The higher the leverage, the smaller the notional size the trader will have access to. The lower the leverage, the higher the notional size the trader can open.

The system will display the maximum allowable position size at different tiers of leverage as shown below.

Maintenance margin calculations are done via a “Tax Bracket” setup. This means that the maintenance margin is always calculated the same way, regardless of what leverage the trader selects. Moving from one bracket to another will not cause the earlier bracket to change its leverage. Again, as noted earlier, it is highly recommended for the trader to liquidate positions before the collateral falls below the Maintenance Margin to avoid auto-liquidation.

Cost Required to Open a Position

Traders should ensure that they have a minimum fund in their wallet balance before opening a position. The cost required to open a position includes the initial margin and open loss (if any). Open loss occurs when the order price is unfavourable to the traders i.e. mark price is lower than the order price for a long order. Binance includes open loss as one of the costs required to open a position to avoid forced liquidation when the traders place the order. If open loss is not counted, there is a high probability that users’ position will get liquidated immediately once they have placed such order. 

 

Cost = Initial Margin + Open Loss (if any)

Step 1: Calculate initial margin

 

Initial Margin 

= Notional Value / Leverage Level 

= [ (10*100 USD) / 9,800 USD ] / 20

= 0.0051 BTC



Step 2: Calculate Open Loss

 

Open Loss = Number of Contract x Contract Multiplier x Absolute Value {min[0, direction of order x (1 / order price - 1 /mark price)]}

 

*direction of order: 1 for long order;-1 for short order

 

Open loss of long order 

= 10 x 100 USD x Absolute Value {min[0, 1 x (1 / 9,800 USD - 1 / 9,602.6 USD)]} 

= 0.002097646 BTC

 

Open loss of short order 

= 10 x 100 USD x Absolute Value {min[0, 1 x (1 / 9,800 USD - 1 / 9,602.6 USD)]} 

= 0

 

Step 3: Calculate the cost required to open a position

 

Since the long order has open loss, thus the cost required to open a long position is higher as we need to take open loss into consideration besides the initial margin. 

 

Cost Required to Open a Long Position

= 0.0051 BTC +  0.002096562 BTC 

= 0.0072 BTC (difference due to rounding off)

 

Short order has no open loss, thus the cost required to open a short position is equivalent to the initial margin. 

 

Cost Required to Open a Short Position

= 0.0051 BTC +  0 = 0.0051 BTC




Have more questions?submit a request
Related Articles
About Quarterly Futures Contract