Initial margin refers to the minimum collateral amount required to open a position in leveraged trading. The leverage used by traders is inversely proportional to the initial margin required to hold a position. The higher the leverage, the less initial margin is required.
- In cross-margin mode, only when the margin currency is the same, the margin can be shared. All margins in the same currency in a contract account are considered free margin.
- In the case of isolated positions, you cannot lower the open position leverage.
The following introduces the initial margin algorithm of different contracts:
- In USDT perpetual contract, the initial margin is The contract value is multiplied by the initial margin rate. The initial margin rate depends on the leverage used.
Initial Margin = Contract Value / Leverage Contract Value = Contract Quantity Opening Price Initial Margin Rate = (1 / Leverage) 100%
When a trader uses 50x leverage to open a long order of 1 BTC at 10,000 USDT.
Initial Margin = (1 * 10,000) / 50 = 200 USDT Initial Margin Rate = 200 USDT / 10,000 = 2% (also equal to 1 / Leverage = 2)