In margin trading, initial margin is the minimum margin required to open a position. The leverage used by traders directly affects the initial margin. The lower the leverage, the higher the initial margin required.
Let's take a look at how the initial margin in USDC perpetual trading is calculated.
Formula:
Initial Margin = Position Size × Position Average Price / Leverage
Example
Trader A places a 0.5 BTC contract at a price of $50,000 with 10x leverage.
Initial Margin = 0.5 × 50,000 / 10 = 2,500 USDC
Please note that the initial margin shown in the position tab includes the taker fee, which may be incurred in closing the position.
*Under regular margin, a USDC perpetual contract only supports the cross margin mode; the initial margin cannot be adjusted.
The estimated closing position fee is calculated slightly differently, depending on the direction of the position — long or short.
Long Positions Formula:
Estimated Fee to Close Position = Position Size × Position Average Price × (1 − 1 / Leverage) × Taker Fee Rate
Revisiting Trader A’s case: Trader A places a 0.5 BTC contract at a price of $50,000 with 10x leverage.
According to the calculation of the above example:
Estimated Fee to close position = 0.5 × 50,000 × (1 − 1 / 10 ) × 0.06% = 13.50 USDC
In this case, the initial margin for the position is (2,500 + 13.50), or 2,513.50 USDC.
Short positions Formula:
Estimated Fee to Close Position = Position Size × Position Average Price × (1 + 1 / Leverage ) × Taker Fee Rate
Revisiting Trader A’s case: Trader A places a 0.5 BTC contract at a price of $50,000 with 10x leverage.
According to the calculation of the above example:
Estimated Fee to Close Position = 0.5 × 50,000 × (1 + 1 / 10 ) × 0.06% = 16.50 USDC
In this case, the initial margin for the position is (2,500 + 16.50), or 2,516.50 USDC.