The funding fee mechanism anchors the trading price of perpetual contracts to the spot price of the underlying asset. Funding Fee = Positional Value * Funding Rate Assuming funding payments occur every 8 hours: The funding fee is directly exchanged…
Mark price refers to the estimated true value of futures contracts. It takes into account the fair value of an asset to avoid unnecessary liquidations during periods of market volatility. Perpetual futures contracts use mark price as the trigger condition…
The index price represents the market consensus price of the underlying asset (the corresponding spot of the futures). It is derived from the weighted average of quotes from multiple spot exchanges, including Pionex, Binance, Bitfinex, Gate.io, OKX, Coinbase, Huobi, and…
Notional Value = Mark Price * Position Size For example, if the current Mark Price of the BTCUSDT perpetual contract is 20,000 USDT, and your Position Size is 5 BTC, then the Notional Value is 20,000 * 5 = 100,000 USDT.
The Initial Margin is the minimum amount of margin required to establish a leveraged position. Initial Margin = Notional Value / Leverage For example, if the current Mark Price of the BTCUSDT perpetual contract is 20,000 USDT, and you open…
What is Maintenance Margin? Maintenance Margin is a crucial term in trading, especially in futures. It refers to the minimum Margin Equity (i.e. Margin + unrealized PnL) that a user must maintain to keep their leveraged position. The Maintenance Margin…
When the Margin Rate is ≥ 100% (i.e., margin + unrealized PnL ≤ maintenance margin), the position triggers liquidation. Margin Rate = Maintenance Margin / (Margin + unrealized PnL) The sum of Margin and unrealized PnL is referred to as…