Last updated: 29 May 2024
Margin requirement for open orders and open positions
The margin requirement in Futures trading includes:
- The margin allocated to existing positions;
- The margin required to open orders.
Please note that there are no margin requirements for pending stop orders. However, the calculation of the margin requirement (i.e., margin check) does occur when stop orders are submitted and triggered. Therefore, only open limit orders occupy margin.
The margin requirement is calculated by the following formulas:
One-way mode margin requirement:
Margin Requirement = Max(Abs(Position Notional Value** + Bid Order Value***), Abs(Position Notional Value - Ask Order Value)) / Leverage
Hedge mode margin requirement:
Margin Requirement = Long-Side Margin Requirement + Short-Side Margin Requirement
= Max(Abs(Long Position Notional Value + Long Bid Order Value), Abs(Long Position Notional Value - Long Ask Order Value)) / Leverage + Max(abs(Short Position Notional Value + Short Bid Order Value), Abs(Short Position Notional Value - Short Ask Order Value)) / Leverage
*Long and short positions here refer to the positions and orders whose positionSide = LONG and SHORT
**Notional value:
- In USDⓈ-Margined Futures, Notional Value = Position Size (calculated in coin) * Symbol Mark Price
- In Coin-Margined Futures, Notional Value = Position Size (calculated in contract) * Contract Value / Mark Price
***Order value:
- In USDⓈ-Margined Futures, Order Value = Order Size (calculated in coin) * Limit Price
- In Coin-Margined Futures, Order Value = Order Size (calculated in contract) * Contract Value / Limit Price
Note: For long positions, the position size is positive, for short positions, the position size is negative.
For instance:
- You have an open long BTCUSDT position of 10,000 USDT notional value (0.5 BTC, mark price 20,000 USDT);
- You have an existing open long limit order of 0.1 BTCUSDT, with a limit price set at 19,000 USDT and a 2x leverage;
- You have an existing open short limit order of 0.1 BTCUSDT, with a limit price set at 22,000 USDT and a 2x leverage.
The required margin for the position and short order = Max(Abs(10,000 USDT + 1,900 USDT), Abs(10,000 USDT - 2,200)) / 2
= 5,950 USDT
= 5,950 USDT
Initial Margin Requirement
When a new order is placed to open a position, the system will conduct an initial margin check.
- There will be initial margin checks for open position orders and reduce-only orders that meet certain conditions.
- There is no margin check for close-position orders.
1. Orders will be treated as open position orders in the following situations:
Buy order:
- The existing position is long;
- The existing position is short. New Order Quantity > Abs (Short position quantity) - Open Buy Order Quantity
For example, you have a 1 BTCUSDT existing short position and a 0.8 BTCUSDT buy open limit order. You want to place a 0.5 BTCUSDT buy limit order:
0.5 BTCUSDT > (1 - 0.8) BTCUSDT
0.5 BTCUSDT > (1 - 0.8) BTCUSDT
Therefore, your new buy limit order will be treated as an open position order.
Short order:
- The existing position is a short position;
- The existing position is a long position. New Order Quantity > Abs(Long Position Quantity) - Open Sell Order Quantity
For example, you have a 1.4 BTCUSDT existing long position and a 0.8 BTCUSDT short open limit order. You want to place a 0.5 BTCUSDT short limit order:
0.5 BTCUSDT < (1.4 - 0.8) BTCUSDT
0.5 BTCUSDT < (1.4 - 0.8) BTCUSDT
Therefore, your new sell limit order will not be treated as an open position order.
2. Reduce-Only orders will also be subject to margin checks if they meet the same conditions above, treated as open position orders.
3. Reduce-Only orders follow the below logic:
- Market close-all RO (reduce-only) orders: If the margin is insufficient after submitting the order, all limit orders in the same direction will be canceled and all positions will be closed.
- RO order with a better price limit than the existing RO: If a newly-placed limit RO order:
- (a) passes the margin check,
- (b) has a price closer to the market price (meaning it’s easier to execute), and
- (c) causes the total size of all RO orders to exceed the position size,
- The pending RO limit order, positioned in the same direction and further away from the market price, will be canceled until the total size of RO limit orders no longer exceeds the current position size.
- RO stop market order: Pending stop orders do not occupy the initial margin, but the system will check the margin required when stop orders are triggered. If the margin is insufficient for triggering an existing RO stop market order, all limit orders in the same direction will be canceled and all positions will be closed.
Open order will be successfully placed when:
- Cost ≤ Available Balance
- Cost includes initial margin and open loss (if any). Please refer to How to Calculate Cost Required to Open a Position in Perpetual Futures Contracts for more details.
- Notional value after the order is placed ≤ Notional value limit for each leverage.
For more details about leverage and notional value, please refer to the Leverage & Margin page.