MUFEX
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  • What is MUFEX?
    • πŸ“–Overview
    • 🏦MUFEX's Decentralized and Trustless Approach
    • πŸ“ˆMUFEX Perpetual Trading System
    • πŸ’ŽMUFEX Liquidity Pool
    • πŸ—ΊοΈRoadmap
  • Start Using MUFEX
    • πŸ‘©β€πŸš€Onboarding
    • πŸ’΅Depositing
      • Deposit FAQ
        • What should I do if the deposited currency has not been received?
        • How to solve recharge error?
        • Funds Recovery Guide
    • πŸ“ˆTrading
      • πŸ’ΉOpen/Close Positions
      • πŸ’²Trading Fees
      • πŸ–₯️Market , Limit & Conditional Order
      • πŸ›°οΈTake Profit & Stop Loss
      • 🏝️Isolated Margin/ Cross Margin
      • πŸ“Trading Rules
        • Risk Limit
        • Risk limit Parameters
        • Index Price
        • Mark Price
        • Liquidation Process
        • Margin Mechanism
        • Funding Fee
        • Insurance Fund
        • Auto-Deleveraging (ADL)
      • πŸ“‘Contract Specs
    • πŸ’ŽEarn
    • 🏧Withdrawal
      • Withdrawal FAQs
        • Why Hasn't My Withdrawal Been Credited?
    • πŸ’²Fee Rates
  • Technical Solution
    • πŸ—οΈTechnology Architecture
    • 🏦ZK-Rollup Asset Proof Design
    • πŸ›₯️Dunkirk Asset Recovery
  • What makes MUFEX secure?
    • πŸ“‘MUFEX Security White Paper
      • Security Team and Its Functions
      • Client Security
      • Endpoint Security
      • Network Security
      • Server Security
      • Application Security
      • Smart Contract Security
      • Data Security
      • Physical Infrastructure Security
    • πŸ“”Smart Contracts
    • πŸ”Audit
    • 🐞Bug Bounty
  • Testnet
    • πŸ§‘β€πŸ³Testnet Walkthrough
      • 1️⃣Get started with MUFEX
      • 2️⃣Get Test Tokens
      • 3️⃣Account & Assets
      • 4️⃣Depositing & Withdrawing
      • 5️⃣Trading
      • 6️⃣Earn via MLP
      • 7️⃣Feedback
      • 8️⃣Common Questions
  • Support
    • πŸ””MUFEX Announcement
      • Notice on Upgrade and Adjustment of the Affiliate System
      • MUFEX Upcoming Delisting of Trading Pairs Reminder
      • MUFEX Notice: Delisting of Certain Trading Pairs
      • MUFEX Coin Pair Adjustment Notice
      • MUFEX is Upgrading MLP and Copy Trading Features
      • MUFEX to Discontinue MLP and Copy Trading Services
      • MUFEX Announcement: Notice on Delisting COMPUSDT and GMTUSDT Contracts
      • MUFEX Announcement: System Upgrade and Trading Suspension Notice Postponement
      • System Upgrade and Trading Suspension Notice
      • MUFEX Cryptocurrency Exchange Service Area Statement:
      • Adjusting Parameters for Certain Contract Trading Pairs (2024/2/7)
    • ❓FAQ
      • How to Delete My MUFEX Account?
      • Why is my IP banned from service
      • Can I use MUFEX service if I don't have an web3 wallet
      • Why do I need to deposit first?
      • Why didn't I see the asset balance change after I deposit?
      • Why did I receive an email from Unipass?
      • What is Effective Leverage?
    • πŸ‘©β€πŸ”¬Help Center
    • πŸ“Release Log
    • πŸ‘¨β€πŸ«MUFEX Affiliate Program
    • πŸ’»Social Media & Communities
    • πŸ’ΌBusiness Cooperation
    • πŸ“±Install MUFEX through the App Store
      • How to get an Apple ID in the US
      • How to use Taobao Purchase a non-mainland Apple ID
      • How to install MUFEX iOS TestFlight
    • πŸ™‹β€β™‚οΈEarly Ambassador Program
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  1. Start Using MUFEX
  2. Trading
  3. Trading Rules

Margin Mechanism

Initial margin refers to the required amount of collateral to open a position, determined by the initial margin rate and the value of the order.

The maintenance margin refers to the minimum amount of collateral required to hold a position. The maintenance margin determines at what price your position will trigger forced liquidation.

Initial Margin (IM)

Initial margin = Initial margin rate * Order price * Order quantity. The actually reserved margin for the order includes additional taker trading fees on both sides; however, the actual trading fees will be paid when the order is executed and calculated based on the actual transaction price.

Maintenance Margin (MM)

Maintenance Margin (MM) is calculated based on the position's Maintenance Margin Rate (MMR), and the Maintenance Margin Rate for each position increases with the incremental increase of the margin tiers.

The Maintenance Margin Amount for each position = Maintenance Margin Rate (MMR) * Opening Position Value.

The transaction fees required for closing the position (Taker) are also included in the maintenance margin requirement for the position. This represents the minimum required collateral to maintain the position, and if the position's margin balance falls below this amount, the position will be forcibly liquidated.

Position margin under isolated margin mode

In isolated margin mode, it depicts the margin placed into a position is isolated from the trader's account balance. In the event of liquidation, the trader will only lose all of his position margin (excluding funding fees). Hence, the position margin under isolated margin mode is:

Position margin (isolated margin mode) = initial margin

Position margin under cross margin mode

When a trader is using cross margin mode, it uses all of a trader’s available balance within the corresponding trading pair coin type to prevent liquidation, hence the display of the position margin will be different from isolated margin as it will now occupy the available balance to cover the unrealized loss. Below shows the details on how position margin is occupied under cross margin mode.

  1. One-way position mode:

Position Margin in cross-margin mode = Available Balance + Initial Margin

  1. Fully hedged position:

For a fully hedged position under cross margin mode, the quantity for long and short position must be the same. Fully hedged positions will not be liquidated as the unrealized profit of one position will be used to support the unrealized loss of the opposite direction of position under the same trading pair.

Position margin (Long position) = 1.2 * Maintenance margin % * Position Value + fee to close - net unrealized loss

Position margin (Short position) = 1.2 * Maintenance margin % * Position Value + fee to close

  1. Partially hedged position:

Position margin for position with lesser quantity= 1.2 * Maintenance margin % * Position Value + fee to close

Position margin for position with more quantity= 1.2 * Maintenance margin % * Position Value for fully hedged proportion + fee to close + initial margin of unhedged proportion + net unrealized loss of fully hedged proportion + unrealized loss of unhedged position

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Last updated 1 year ago

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