Contact Trading Course: "Margin" Mechanism of Contract Product

"Margin" means the amount of own capital that you must deposit on the exchange in order to start trade. "Margin" is divided into "Initial Margin" and "Maintenance Margin".

"Initial Margin" is the minimum amount of capital you need to open a contract position.

"Maintenance Margin" is the minimum amount of margin to maintain your contract position.

What is "Initial Margin"?

"Initial Margin" is the minimum amount of capital you need to open a contract position.

For example:

Take BW BTC_USDT perpetual contract as an example, without consideration of commission fees, etc.

1 contract's BTC value: 0.001 BTC

Order Opening Price: 12000 USDT (1 BTC values 12000 USDT)

Order Opening Amount: Long, 5 contracts

Order Contract Value: 5 contracts * 0.001 BTC * 12000 USDT = 60 USDT

Leverage Times: 20X

Initial Margin: Order Contract Value/Opening Leverage Times = 60 USDT / 20X = 3 USDT

That is: You deposit 3 USDT as Initial Margin then can hold BTC_USDT perpetual contract with a value of 60 USDT by using 20X leverage.

Click "Buy/Go Long" to view detailed current contract order:

What is "maintenance margin"

The maintenance margin ratio is the minimum required to hold a contractual position: "position margin/contract value" ratio.

"Maintenance margin" is the minimum position margin for maintaining contract positions.

Summary of“ Margin”

1) "Initial Margin" is the minimum fund as a deposit to use leverage.

2) High leverage enlarges earning, and at the same time magnifies risk. Please carefully and reasonably choose the leverage multiple.

3) BW provides "simulated contract trading" function, you can use simulated capital to trade on "simulated contract" first, and be familiar with contract trade rules.