1. What is Margin?
In the contract market, traders only need to use a small number of funds at a certain rate according to the contract price as a financial guarantee for the orders to perform, and they can participate in the trading of the contract. This fund for contract usage is called margin.
In the process of margin trading, it is necessary to pay attention to:
- Initial margin: The minimum margin required to open a position, and the initial margin rate (open position value/position margin) which also represents your leverage rate
- Maintenance Margin: A minimum margin required to maintain a position below bankrupt price otherwise, your position will be forced to liquidation
- Cost of position: The total frozen assets required to open a position including the initial margin for opening a position and possible trading fees.
- Actual leverage: The current position's leverage ratio of unrealized profit and loss.
2.Risk Limit
OceanEx imposes risk limits on all trading accounts to minimize the occurrence of large liquidations on margined contracts. As users amass larger positions, they pose a risk to others on the exchange who may experience a deleveraging event if the position cannot be fully liquidated. Each instrument has a Base Risk Limit and Step. These numbers combined with the base Maintenance and Initial Margin requirements are used to calculate your full margin requirement at each position size.
As the position size increases, the maintenance and initial margin requirements will increase. Users must authorize a higher or lower risk limit on the Positions panel. Margin requirements will automatically increase and decrease as your risk limit changes.
The risk limit of the current contract:
- Risk Limit = (Position value+Unfilled order value - Base Risk Limit)/Steps+1
Note: Risk limit level is rounded up
The margin requirements for each contract are as follows:
- Initial Margin:IMR= Risk limit *0.01=[(Position value+Unfilled order value- Base Risk Limit)/Steps+1] *0.01
- Maintenance Margin:MMR=Risk limit *0.005=[(Position value+Unfilled order value- Base Risk Limit)/Steps+1] *0.005
The risk limits for each contract product are as follows:
Contract |
Base Risk Limit |
Step |
BTCUSDT contract |
200,000 USDT |
100,000 USDT |
ETHUSDT contract |
100,000 USDT |
50,000 USDT |