BitForex Perpetual Contract uses the Cross Margin/Spread Margin model. Traders only need to pay a margin according to the BTC value of the order to conduct a perpetual contract transaction.
Cross Margin utilizes the full amount of funds in the Available Balance (referring to the available balance of the BitForex Perpetual Contract Account) to avoid liquidations. A position will be under forced liquidation when Account Asset ≤ Maintenance Margin or when the Risk Rate≥100%.
Pros and Cons for the Cross Margin Mode：
Cross Margin Method is useful for users who are hedging existing positions and also for arbitragers that do not wish to be exposed on one side of the trade in the event of a liquidation.
Cons of Cross Margin Mode is lost of all assets in Perpetual Contract account may occur when there is a significant change in the market.
Tiered Margin Ratio:
BitForex Tiered Margin Ratio System is adopted to avoid the liquidation of large positions, causing big impact on market liquidity. Basically, the larger the positions held, the lower the Leverage will be available, and the higher Initial Margin Ratio will be required. Learn more at Tiered Margin Ratio FAQ
Initial Margin and Maintenance Margin:
- What is Initial Margin?
- Initial Margin is the amount of collateral required to open a position.
- Initial Margin Ratio = 1/Leverage * 100%
- Initial Margin = Order Value * Initial Margin Ratio
- Different positions levels have different leverage available. To learn more, click here
- What is Maintenance Margin?
- Maintenance Margin is the minimum amount to keep a position open.
- All positions requires a set maintenance margin of 0.50%.
- Maintenance Margin = Position Value * Maintenance Margin Ratio = Position Value * 0.50%
- Position Type: Buy/Long
- Average Open Price: 10000 USD / BTC
- Position Amount: 1,200,000 Cont.
- Multiplier: 1 contract = 1 USD
According to the Tiered Margin Ratio, this position is in Tier 2, and the maximum leverage available is 66.
When the user set 50x leverage：
Initial Margin Ratio = 1/50*100%=2%
Maintenance Margin Ratio = 0.5%
Initial Margin = Order Value * Initial Margin Ratio = 1,200,000 /10,000* 2%= 120 BTC * 2% = 2.4 BTC
Maintenance Margin = Position Value * Maintenance Margin Ratio= 1,200,000 /10,000* 0.5%= 120 BTC * 0.5% =0.6 BTC