When trading cryptocurrency futures, understanding key position metrics is essential for effective risk management and maximizing returns. Whether you're a beginner or an experienced trader, mastering terms like position size, margin, liquidation price, and margin ratio can significantly improve your trading performance. This comprehensive guide breaks down these core concepts in clear, actionable detail—helping you navigate the complexities of contract trading with confidence.
What Is Position Size?
After your order is filled, your open position appears under the "Current Positions" section on your trading interface. The value of your position can be displayed in two units: contracts (lots) or cryptocurrency (coins). You can switch between these units easily via the settings icon in your trading panel.
Understanding how position size affects leverage and margin is crucial. Larger positions increase both potential profits and risks—especially when using high leverage.
👉 Learn how to calculate your ideal position size based on risk tolerance and market volatility.
Available Quantity for Closing (Available to Close)
This refers to the number of contracts you can immediately close. It's calculated as:
Available Quantity = Current Position Size – Frozen for Closing Orders
If you've placed a close order that hasn't been executed yet, part of your position may be frozen, reducing the available quantity. Always check this value before placing new closing orders to avoid execution errors.
Margin: The Foundation of Leverage Trading
Margin is the collateral required to open and maintain leveraged positions. The calculation depends on two factors:
- Contract type (USDT-margined or coin-margined)
- Margin mode (cross-margin or isolated margin)
USDT-Margined Contracts
- Cross Margin:
Margin = Face Value × Number of Contracts × Mark Price / Leverage - Isolated Margin:
Margin = Face Value × Number of Contracts × Entry Price / Leverage
Coin-Margined Contracts
- Cross Margin:
Margin = Face Value × Number of Contracts / Mark Price / Leverage - Isolated Margin:
Margin = Face Value × Number of Contracts / Entry Price / Leverage
Example Calculation
Suppose you're trading a BTCUSDT futures contract with:
- Mark price: 10,000 USDT/BTC
- Face value: 0.0001 BTC per contract
- Desired exposure: 1 BTC (equivalent)
- Leverage: 10x
Number of contracts = 1 / 0.0001 = 10,000 contracts
Required margin = 0.0001 × 10,000 × 10,000 / 10 = 1,000 USDT
In isolated margin mode, traders can enable auto-margin top-up, which automatically adds funds to prevent liquidation when margin ratio drops near maintenance levels.
You can manually disable this feature to maintain full control over margin adjustments—ideal for advanced risk management strategies.
Margin Ratio: Measuring Risk Exposure
The margin ratio indicates how close your position is to liquidation. A lower ratio means higher risk.
Key Definitions
- Initial Margin Ratio = 1 / Leverage
For example, at 10x leverage, initial margin ratio is 10%. - Maintenance Margin Ratio: Minimum threshold needed to keep the position open. If your margin ratio falls below this level plus the close fee rate, forced liquidation occurs.
Calculation Formulas
USDT-Margined Contracts
- Isolated Margin:
Margin Ratio = (Fixed Margin + Unrealized PnL) / Position Value
Where:Position Value = Face Value × Contracts × Mark Price - Cross Margin:
Margin Ratio = (Balance + Realized PnL + Unrealized PnL) / (Position Value + Frozen Margin × Leverage)
Coin-Margined Contracts
- Isolated Margin:
Margin Ratio = (Fixed Margin + Unrealized PnL) / (Face Value × Contracts / Mark Price) - Cross Margin:
Margin Ratio = (Account Balance + Realized PnL + Unrealized PnL) / (Face Value × Contracts / Mark Price + Frozen Margin × Leverage)
Practical Example
Trading BTCUSDT with:
- Entry: 10,000 USDT/BTC
- Leverage: 10x
- Position: Long 1 BTC (10,000 contracts)
- Maintenance margin rate: 1.5%, Close fee rate: 0.05%
Initial margin = 1,000 USDT → Initial margin ratio = 10%
If BTC drops to 9,010 USDT/BTC:
- Unrealized loss = (9,010 – 10,000) × 1 BTC = –990 USDT
- Margin ratio = (1,000 – 990) / (0.0001 × 10,000 × 9,010) = 10 / 9,010 ≈ 0.11%
Since 0.11% < (1.5% + 0.05%) = 1.55%, the position will be liquidated.
👉 Use real-time tools to simulate liquidation scenarios before entering a trade.
Profit and Loss (PnL): Tracking Performance
Your current profit includes both:
- Unrealized PnL: Gains or losses from open positions
- Realized PnL: Profits already credited to your balance after partial or full closure
Monitoring unrealized PnL helps assess ongoing trade health and adjust exit strategies accordingly.
Return on Margin (RoM)
Also known as yield, this metric shows efficiency:
Yield = Total Profit / Initial Margin Required
A high yield indicates efficient use of capital. For instance, earning $50 profit on a $1,000 margin equals a 5% return—valuable when comparing opportunities across different leverage levels.
Average Entry Price
This reflects your weighted average cost basis across multiple entries. It updates whenever you add to or reduce your position—but only if new trades occur at different prices.
For USDT-Margined Contracts:
(New Avg Price) = (Old Qty × Old Avg Price + New Qty × New Avg Price) / Total Qty
Example:
Hold 6 contracts at $500 → Buy 5 more at $566
New average = (6×500 + 5×566) / 11 = $530
For Coin-Margined Contracts:
Use inverse pricing due to settlement in crypto:Total Qty / New Avg Price = (Old Qty / Old Avg Price) + (New Qty / New Avg Price)
This ensures accurate cost tracking when dealing with fluctuating base asset values.
Estimated Liquidation Price
This is the price at which your position will be forcibly closed due to insufficient margin. It corresponds to the point where:
Margin Ratio = Maintenance Margin Rate + Close Fee Rate
You can estimate it using built-in calculators or manual formulas based on current margin balance and position size.
Traders should always monitor this value—especially during volatile markets—to avoid unexpected losses.
Maintenance Margin Rate and Tiered Systems
Your required maintenance margin depends on your position tier, which increases with larger holdings.
Isolated Mode
Each direction (long/short) is calculated separately.
Cross Mode
All positions in a single contract are aggregated. For example:
- Long: 10,000 contracts
- Short: 15,000 contracts
→ Total counted as 25,000 contracts, determining tier level and required margin.
Higher tiers typically require more buffer due to increased systemic risk.
How to View All Open Positions
All active positions appear under the Positions tab in your futures trading dashboard. Here you can:
- Monitor unrealized PnL
- Adjust leverage
- Set take-profit and stop-loss orders
- Manually add margin or enable auto-top-up
Regularly reviewing this section ensures timely responses to market changes.
Frequently Asked Questions (FAQ)
Q: What happens when my position gets liquidated?
A: The system automatically closes your position at the prevailing market price to prevent further losses beyond your margin. You lose the initial collateral but are not liable for additional debt.
Q: Can I change from isolated to cross margin after opening a position?
A: No—margin mode must be selected before entering a trade and cannot be changed afterward.
Q: Why does my average entry price change after adding to a position?
A: Because it's a volume-weighted average. New trades at different prices adjust the overall cost basis proportionally.
Q: How accurate is the estimated liquidation price?
A: It’s a close approximation based on current fees and mark price, but rapid price movements or funding rate changes may cause slight deviations.
Q: Does unrealized PnL affect my available balance?
A: No—it only impacts margin ratio and liquidation risk. Only realized PnL becomes spendable balance.
Q: What’s the benefit of enabling auto-margin top-up?
A: It helps avoid sudden liquidations during short-term volatility by automatically injecting funds when margin drops below a threshold.
By mastering these contract metrics—position size, margin, liquidation price, margin ratio, and more—you gain greater control over your trading outcomes. Combine this knowledge with disciplined risk management and real-time analytics to thrive in the dynamic world of crypto derivatives.