Initial margin refers to the amount required to put down as collateral to enter a leveraged position.
The initial margin is required to enter new derivatives positions or to keep existing derivatives positions open. If there are not enough funds in your trading account to cover the initial margin, any open orders will be cancelled.
The formula for initial margin on Interdax is:
initial margin= (minimal initial margin percentage + position margin multiplier * maximum absolute position) * absolute value of open orders that result in position increase
- The minimal margin percentage is a fixed rate that is applied to orders.
- The position margin multiplier increases the initial margin requirements in proportion with larger position sizes.
- The maximum absolute position is the largest position that can be achieved if a trader’s open orders are filled.
- The absolute value of open orders that result in a position increase is the value of orders that will increase your position size, i.e., the value of the trader’s open orders.
Suppose you want to buy 1,000,000 BTC-PERP contracts and enter a long position. Suppose a trader has 10,000 contracts in open buy orders for BTC-PERP. The maximum absolute position is 1,010,000 contracts, while initial margin is required for 10,000 contracts.
However, if there is a long position of 1,000,000 BTC-PERP contracts, but the trader has 1,000,000 contracts in open sell orders, then the maximum absolute position is 0 and no initial margin is required in this case.
Let’s say the trader has 1,000,000 BTC-PERP contracts in a long position and has 10,000 contracts in open buy orders. Suppose the mark price of BTC-PERP is $9,000, the initial margin percentage is 1% and the position margin multiplier is 0.0000001%. Since the maximum achievable position is 1,010,000 contracts, the initial margin percentage is calculated as:
(0.01 + (0.000000001*1,010,000)) = 0.01101
Therefore, initial margin percentage is 1.101%.
The initial margin is then calculated by multiplying the initial margin percentage with the absolute value of open orders that results in a position increase. Since there are 10,000 contracts in open orders that result in a position increase, the initial margin is then:
(0.01101)(10,000/9,331) = (0.01101)(1.111111) = 0.01179 BTC
Click on Deposit then go to Balances to view the initial margin and maintenance margin on the Balances page:
Initial Margin for Instruments on Interdax
The Minimal Maintenance Margin Percentage and Position Margin Multiplier for all derivatives on Interdax are shown below.
The figures below can be used for the relevant instrument and inserted into the formula outlined above to calculate initial margin for a given position.
|Instrument||Minimal Initial Margin Percentage||Position Margin Multiplier|