How to calculate the initial margin for perpetual and futures USDC contracts

When margin trading on the platform, the initial margin plays a key role — it is the minimum required capital to open any trading position. Understanding the mechanism of calculating the initial margin is critically important for risk management and optimizing trading strategies.

The relationship between initial margin and leverage

Leverage chosen by the trader directly determines the size of the required initial margin. There is an inverse relationship: the higher the leverage, the less of your own funds are needed to open a position. For example, with the same contract value, using 10x leverage requires half as much capital as 5x leverage. This mechanic allows traders to utilize their capital more efficiently but also increases potential risk.

The basic formula for determining initial margin

The calculation of the initial margin is based on the following ratio:

Initial Margin = Position Value ÷ Leverage

Where Position Value is calculated as the product of the position size and the current mark price:

Position Value = Position Size × Mark Price

This scheme allows the system to automatically adjust margin requirements depending on the contract size and selected leverage.

Practical calculation for a long position

Let’s consider a scenario: a trader opens a long position of 0.5 BTC at an entry price of $50,000 with 10x leverage. If the current mark price is $50,500, then:

Position Value = 0.5 × 50,500 = 25,250 USDC

Base initial margin = 25,250 ÷ 10 = 2,525 USDC

However, the platform shows an additional component — the calculated closing fee. For a long position, it is determined by the formula:

Calculated fee (long) = Position Size × Entry Price × (1 − 1 ÷ Leverage) × Taker fee rate

With a fee rate of 0.055%:

Calculated fee = 0.5 × 50,000 × (1 − 1 ÷ 10) × 0.055% = 12.375 USDC

Total initial margin = 2,525 + 12.375 = 2,537.375 USDC

Practical calculation for a short position

When opening a short position of the same amount (0.5 BTC, entry price $50,000, leverage 10x), the calculation differs. For a short, the formula for the calculated fee uses a “plus” sign instead of a “minus”:

Calculated fee (short) = Position Size × Entry Price × (1 + 1 ÷ Leverage) × Taker fee rate

With the same fee rate of 0.055%:

Calculated fee = 0.5 × 50,000 × (1 + 1 ÷ 10) × 0.055% = 15.125 USDC

Total initial margin = 2,525 + 15.125 = 2,540.125 USDC

Note that the margin requirement for the short position is higher by 2.75 USDC — this reflects differences in cost structure when closing positions.

Dynamic changes in initial margin over time

A critical point: the initial margin is not static. Since the calculation depends on the mark price, which fluctuates in real time, the margin requirement is constantly recalculated.

As the mark price increases, the value of the position rises, automatically raising the initial margin requirement. However, for long positions, this does not increase the overall risk of the account — the increase in margin requirement is offset by unrealized profit from the position. For short positions, a similar principle applies but in the opposite direction.

Understanding this dynamic helps traders anticipate changes in their margin calls and manage their portfolios more prudently.