USDT-based contracts refer to contract trading where USDT is used as margin. The management of leverage and margin is a crucial part of trading. Here's a detailed introduction to the leverage and margin management in USDT-based contracts:
Leverage
Leverage allows you to use a smaller amount of capital to control a larger position. Trading with leverage can amplify profits, but it also increases risks.
- Leverage Multiples:
BitMart USDT-based contracts allow leverage multiples ranging from 1x to 100x.
- Influencing Factors:
The leverage multiple chosen directly affects the required margin ratio. The higher the leverage multiple, the lower the initial and maintenance margin required, but the higher the risk.
Margin
Margin is divided into initial margin and maintenance margin:
- Initial Margin:
This is the margin required when opening a position. The formula for calculating the initial margin is:
Initial margin = contract value/leverage multiple
For example, if you use 10x leverage to trade a contract valued at 1000 USDT, the initial margin would be 100 USDT.
- Maintenance Margin:
This is the minimum margin required to maintain a position. If the account balance falls below the maintenance margin, a forced liquidation may occur. Maintenance margin is usually lower than the initial margin, generally 0.5%-2% of the contract value.
- Margin Ratios:
Different leverage multiples correspond to different initial and maintenance margin ratios. For example, using 100x leverage, the initial margin ratio is 1% and the maintenance margin ratio is 0.5%.
Example of Practical Operation:
Suppose you are trading on BitMart using a USDT-based contract with a leverage multiple of 50x and you open a position valued at 1000 USDT.
Initial Margin:
Initial margin=1000 USDT/50=20 USDT
Maintenance margin:
If the maintenance margin ratio is 0.5%, the maintenance margin is:
Maintenance margin=1000 USDT×0.005=5 USDT
