Key Metrics Explained

Equity

Equity represents the total balance in your derivatives account, which includes your balance and unrealized PNL (Profit and Loss) and Margin used.

Total account value = Balance + Unrealized PNL + Margin Used

Example: Balance = $1000, PNL = $50 Equity = $1050

Margin

Margin is the amount of capital required to open and maintain a position.

Initial Margin: Needed to open a position

Maintenance Margin: Needed to keep it open

Formula: Initial Margin = Position Size / Leverage

Ex: For 0.01 BTC at $87,000 with 10x leverage: Margin = 870 / 10 = $87

Liquidity Ratio

The liquidity ratio shows your account for your health. A lower liquidity ratio increases the risk of liquidation.

Formula: Equity / Maintenance Margin

Example: Equity = $500, MM = $50 → Ratio = 10.0

If your equity is $500 and the maintenance margin is $50, the liquidity ratio is 10.0. A ratio close to 1.0 is risky and could lead to liquidation.

Hedging

Hedging mode allows you to hold both long and short positions on the same asset simultaneously. This is useful for advanced trading strategies and risk management.

Example Scenario: If you anticipate volatility in the BTC market, you might open up a long position to benefit if the price rises and a short position to benefit if it falls. This strategy can help balance your overall risk.

Equity and Margin Calculations

Each position margin is calculated separately. This allows for independent management of each position.

For instance, if you have a long position with an initial margin of $100 and a short position with an initial margin of $100, each position will be maintained independently based on its specific margin requirements.

Netting Mode

Netting mode restricts you to only one position per asset in one direction (either long or short). This mode is simpler and is commonly used in directional trading.

Example Scenario: In a bull market, you may only want to hold a long position on BTC. Netting mode allows you to open a single long position, simplifying management.

Equity and Margin Calculations:

• Margin requirements in netting mode adjust based on the single position you hold.
• If you close your long position and open a new short position, your margin recalculates for the new position.