Understanding Ordering Cost: What You Need to Know Before Trading Perpetuals

Ordering cost is one of the most misunderstood concepts in perpetual and futures trading. Whether you’re a beginner or an experienced trader, understanding what comprises this cost can save you significant money and help you make better trading decisions. Let’s break down exactly what ordering cost means and how it affects your trading strategy.

What Is Ordering Cost and Why Does It Matter?

When you place an order on a perpetual or futures trading platform, you’re not just paying for the position itself—you’re covering multiple expenses that add up to your total ordering cost. This total represents all the funds required to execute your order, from opening to closing.

Think of ordering cost as a complete financial picture. It includes the initial capital you need to hold a position, the fee charged when you open the trade, and even the fee you’ll pay when you eventually close it. By understanding this upfront, you can accurately calculate your true trading expenses before committing capital.

How Ordering Cost Breaks Down: Initial Margin and Fees

Your ordering cost consists of three main components:

Initial Margin: This is the collateral required to open your position. It’s calculated based on your position size, the entry price, and your leverage level. With higher leverage, you need less initial margin, but this also increases your risk exposure.

Fee to Open: Every time you submit an order (typically as a market order), the platform charges a taker fee. This fee is calculated on the full contract value and depends on your account’s fee tier or VIP status.

Fee to Close: Just like opening a position, closing it incurs fees. However, the closing fee calculation is slightly different depending on whether you’re liquidating a long or short position—it factors in your leverage to account for the different risk profiles.

Together, these three elements determine your total ordering cost, which is reserved from your account balance the moment you place an order.

Ordering Cost Calculations Across Different Contract Types

Not all contracts work the same way when it comes to ordering cost. The primary distinction lies in how they’re settled and denominated.

USDT and USDC Contracts: These are the most common contract types. Your ordering cost is denominated and paid in the settlement currency (USDT or USDC). This makes budgeting straightforward—you know exactly how many dollars equivalent you’re committing.

Inverse Contracts: These are quoted and settled in the underlying asset. For example, a BTCUSD contract settles in Bitcoin, while an ETHUSD contract settles in Ethereum. Your ordering cost is therefore calculated in the respective coin, not in dollars. This means if you’re trading ETHUSD, your ordering cost will be expressed in ETH, not USDT.

For traders using Unified Trading Accounts (UTAs), there’s added flexibility. You can use multiple collateral assets as margin, which means you don’t need to hold the exact settlement currency to cover the initial margin. However, the opening and closing fees still must be paid in the settlement asset itself. If you don’t have enough of the settlement currency on hand, the system will automatically borrow it for you—an important detail to keep in mind when planning your cost management.

Real-World Examples: Calculating Ordering Cost

Let’s walk through practical scenarios to see how ordering cost works in action.

Scenario 1: USDT Contract Trade

Imagine you want to go long on BTCUSDT, opening 1 BTC at a price of 50,000 USDT with 10x leverage. Using a market order with a taker fee of 0.055%:

• Initial Margin = (50,000 × 1) ÷ 10 = 5,000 USDT
• Fee to Open = 1 × 50,000 × 0.055% = 27.5 USDT
• Fee to Close = 1 × 50,000 × (1 − 1÷10) × 0.055% = 24.75 USDT
• Total Ordering Cost = 5,052.25 USDT

This means your account needs to reserve 5,052.25 USDT when you place the order, even though your position value is only 50,000 USDT.

Scenario 2: Inverse Contract Trade

Now let’s say you’re trading ETHUSD inversely. You open a long position worth 10,000 USD at 2,000 USDT per ETH with 25x leverage:

• Initial Margin = (10,000 ÷ 2,000) ÷ 25 = 0.2 ETH
• Fee to Open = (10,000 ÷ 2,000) × 0.055% = 0.00275 ETH
• Fee to Close = (10,000 ÷ 2,000) × (1 + 1÷25) × 0.055% = 0.00286 ETH
• Total Ordering Cost = 0.20561 ETH

Notice how even small positions in inverse contracts can require meaningful amounts of the underlying asset. This is why inverse trading requires careful planning around ordering cost.

Flexible Order Placement Methods to Manage Your Ordering Cost

Different platforms offer multiple ways to place orders, and these methods give you control over how you deploy capital:

Order by Quantity: The traditional method where you specify how many contracts you want to buy or sell. For USDT/USDC contracts, this is measured in the underlying token (e.g., MNT for MNTUSDT). For inverse contracts, quantity is in USD value.

Order by Cost: You specify your total spending budget, and the system calculates how many contracts that can buy. This approach is particularly useful when you have a fixed amount of capital you want to deploy and want the system to determine the position size accordingly.

Order by Value: You decide the total position value you want to open, and the system figures out the contract quantity needed. For inverse contracts, the value is expressed in the asset itself; for USDT/USDC contracts, it’s in the stablecoin.

By choosing the right order placement method and understanding your ordering cost beforehand, you can make more informed decisions about position sizing, leverage, and overall portfolio allocation. Remember that your actual fees may vary depending on your account’s VIP tier and current market conditions, but knowing how to estimate ordering cost remains a critical skill for any derivatives trader.