Leverage and Position Limit (Coin-margined)
# Leverage and Position Limit (Coin-margined)
Coin-margined perpetual contracts offer traders the ability to use leverage while using the underlying cryptocurrency as margin. This article explains the leverage system and position limits specific to coin-margined contracts.
# Leverage System
Coin-margined contracts provide flexible leverage options that allow traders to amplify their exposure to price movements while using the underlying cryptocurrency as collateral. The maximum leverage available varies by contract and position size.
# Leverage Adjustment
- Users can adjust their leverage before opening a position.
- For existing positions, leverage can only be decreased, not increased.
- When decreasing leverage for an open position, additional margin may be required.
# Leverage Tiers
The maximum available leverage for coin-margined contracts decreases as position size increases. Below is a general leverage tier structure:
| Position Size (BTC Value) | Maximum Leverage |
|---|---|
| < 5 BTC | 100x |
| 5 - 20 BTC | 50x |
| 20 - 50 BTC | 20x |
| 50 - 100 BTC | 10x |
| > 100 BTC | 5x |
Note: The specific tier thresholds vary by contract and may be adjusted based on market conditions.
# Unique Characteristics of Coin-margined Leverage
Coin-margined contracts have unique leverage characteristics compared to USDT-margined contracts:
Inverse Relationship with Price: As the price of the underlying asset increases, the BTC value of the position decreases for the same notional USD amount, potentially allowing for higher leverage.
Dynamic Margin Requirements: The margin requirements (in cryptocurrency terms) change with price movements:
- When prices rise, margin requirements decrease for long positions
- When prices fall, margin requirements increase for short positions
Liquidation Risk: Due to the inverse nature of coin-margined contracts, liquidation dynamics differ from USDT-margined contracts:
- Long positions become less likely to be liquidated as prices rise
- Short positions become more likely to be liquidated as prices fall
# Position Limit System
Position limits define the maximum position size a user can hold in a single contract. For coin-margined contracts, these limits are denominated in USD value.
# Position Limit Calculation
Position limits for coin-margined contracts are calculated based on:
- Market Depth: Contracts with higher liquidity typically allow for larger position sizes.
- User VIP Level: Users with higher VIP levels may have higher position limits.
- Risk Parameters: During periods of high volatility, position limits may be adjusted.
# Default Position Limits
| Contract | Maximum Position Size (Notional Value in USD) |
|---|---|
| BTC/USD | 10,000,000 USD |
| ETH/USD | 5,000,000 USD |
| Others | Varies by contract |
Note: Position limits are subject to change based on market conditions and platform risk management policies.
# Maintenance Margin System
The maintenance margin is the minimum margin required to keep a position open. When the margin ratio falls below the maintenance margin rate, the position is at risk of liquidation.
# Maintenance Margin Tiers
Similar to leverage, maintenance margin requirements follow a tiered system based on position size:
| Position Size (BTC Value) | Maintenance Margin Rate |
|---|---|
| < 5 BTC | 0.5% |
| 5 - 20 BTC | 0.75% |
| 20 - 50 BTC | 1.0% |
| 50 - 100 BTC | 1.5% |
| > 100 BTC | 2.0% |
# Best Practices for Managing Coin-margined Positions
Monitor Price Impact on Margin: Remember that as prices fall, your margin requirements (in crypto terms) increase for the same position size.
Understand Liquidation Dynamics: Liquidation prices for coin-margined contracts behave differently than USDT-margined contracts due to the inverse nature of the contracts.
Start with Lower Leverage: Begin with conservative leverage, especially if you're new to coin-margined contracts, as their behavior differs from traditional futures.
Maintain Additional Margin Buffer: Keep extra margin in your account to handle price volatility, especially for short positions during market downturns.
Consider Market Direction: Coin-margined contracts can be particularly advantageous for shorts in bear markets when you want to accumulate more of the base currency.