Margin Trade Principles
KuCoin Futures offers leverage on all of the Futures and Perpetual Swap products. Leverage is determined by the Initial Margin and Maintenance Margin levels, which specify the minimum funds you must hold in the account to enter and maintain a position. The amount of leverage varies from one product to another. The highest leverage KuCoin Futures offers is up to 100x.
For example, if a trader uses 100x leverage to long 5 BTC at 5000USD, he’ll need 0.05 BTC (fees not included) as margins to open the position. If the price of the contract goes up by 1%, the trader will profit 100% of his margin. Through the usage of margin and leverage, the trader has profited a higher rate of return with less funds. But if the price of the contract falls by 0.5% and if the position is in Isolated Margin mode, the position will be liquidated and all the margins will be lost. However the maximum funds losses is only limited to this fixed amount of funds used for margin.
Isolated Margin
In this mode, funds used for a certain position is a fixed amount and any Available Balance you may have will not be used to add margin to your position. That is, the maximum funds you may lose is limited to this fixed amount. This is useful for a speculative position and traders may limit the risk in an easy way.
Auto-Deposit Margin
When Auto-Deposit Margin mode is enabled, funds in the Available Balance will be added to the existing position whenever liquidation happens, trying to prevent the position from being liquidated. This mode is useful for users who are hedging existing positions.
Traders may choose to enable the “Auto-Deposit Margin” mode in the Leverage panel or the “Positions and Open Orders” panel.
Differences Between Auto-Deposit Margin and Cross Margin
- Auto-Deposit Margin utilizes the fixed amount of margin of the position to calculate the liquidation price. Only when the mark price reaches the liquidation price, the system will add margin from the available balance to the position and recalculate the liquidation price based on the current margin.
- Different from the Auto-Deposit Margin, the Cross Margin utilizes the full amount of margin in the available balance for the liquidation price calculation and the margin amount may increase or decrease as the mark price changes. The added margin to the position will be scaled down if there’s profit in the position.
Initial Margin
Initial Marginis the minimum amount of funds you must deposit to open a position.
Initial Margin = Order Value * Initial Margin Percentage
The calculation of the Initial Margin Percentage is based on the leverage of the order and the risk limit.
For example, if a trader uses 20 leverage to long 100 BTC lots, then the percentage of the initial margin is 5%, and the trader needs 5 BTC initial margin to open the position.
Maintenance Margin
Maintenance Margin is the minimum amount of funds you must hold to keep a position open. Once the margin balance drops below this level, your position will be taken over by the Liquidation Engine and get liquidated.
Maintenance Margin = Position Value * Maintenance Margin Percentage (MM)
You may check the maintenance margin percentage at Contract Specifications.
