1. Understanding Margin
In the crypto futures market, margin refers to the percentage of a futures contract's value that traders must deposit in their account to open a position. It acts as collateral to cover potential losses and ensures market stability.
2. Calculating Margin
OKX offers two margin modes: Cross Margin and Isolated Margin.
Cross Margin Mode
In this mode, all margin balances are shared across open positions, reducing liquidation risk.
Formulas:
- Crypto-Margined Contracts:
Initial Margin = Contract Size × |Number of Contracts| × Multiplier / (Mark Price × Leverage) - USDT-Margined Contracts:
Initial Margin = Contract Size × |Number of Contracts| × Multiplier × Mark Price / Leverage
Key Features:
- Margin fluctuates based on mark price.
- Margin requirements for open orders must also be factored in.
Isolated Margin Mode
Each position has its own dedicated margin, allowing precise risk management.
Formulas:
- Crypto-Margined Contracts:
Initial Margin = Contract Size × |Number of Contracts| × Multiplier / (Average Entry Price × Leverage) - USDT-Margined Contracts:
Initial Margin = Contract Size × |Number of Contracts| × Multiplier × Average Entry Price / Leverage
3. Margin and Leverage
Leverage amplifies both potential returns and risks by allowing traders to control larger positions with less capital.
Examples:
- Crypto-Margined BTC Trade:
For 10x leverage on a 1 BTC position at $10,000:
Initial Margin = 0.1 BTC. - USDT-Margined BTC Trade:
Same parameters require 1,000 USDT initial margin.
👉 Learn more about leveraging trades
4. Margin Requirements
- Initial Margin Rate: 1 / Leverage.
- Maintenance Margin: Minimum margin needed to keep a position open.
Margin Level Formulas:
- Cross Margin: Adjusted Equity / (Maintenance Margin + Liquidation Fees).
- Isolated Margin (Crypto/USDT): Uses position-specific calculations.
5. Managing Margin Calls
Exclusive to isolated margin mode, traders can add funds to specific positions to avoid liquidation.
6. Adjusting Leverage
OKX allows leverage adjustments for open positions:
- Increasing leverage reduces required margin.
- Decreasing leverage requires sufficient account funds.
7. Futures Order Loss
Order loss occurs when execution price diverges from mark price. OKX factors this into position costs to prevent liquidation.
Formulas:
- USDT-Margined Contracts:
Loss = Absolute Value of (Contract Size × |Number of Contracts| × Multiplier × Price Difference). - Crypto-Margined Contracts: Similar but inverse calculation.
👉 Explore risk management tools
FAQs
Q: What happens if my margin level drops below maintenance?
A: Your position may be liquidated to cover losses.
Q: Can I switch margin modes after opening a position?
A: No, margin modes must be selected when opening a position.
Q: How does leverage affect my profit/loss?
A: Higher leverage increases both potential gains and losses proportionally.
Q: Are margin requirements the same for all contracts?
A: No, they vary by contract type (crypto/USDT) and trading mode.
Final Notes
Margin and leverage are powerful tools but require careful risk assessment. Always ensure your account has sufficient funds to cover potential fluctuations.
Disclaimer: Trading digital assets involves significant risk. OKX is not liable for financial losses.