Margin and Profit/Loss Calculation in Futures Trading

MEXC offers two types of futures contracts: USDT-margined contracts (linear contracts) and coin-margined contracts (inverse contracts). While they share similar calculation principles, there are key differences between them. This guide provides clear examples to explain margin requirements and profit/loss calculations—simplifying complex trading concepts for better understanding.

1. Margin Requirements Explained

All futures trading positions require margin deposits. These three key concepts are essential for traders:

Initial Margin: The minimum deposit required to open a position, representing your leverage ratio
Maintenance Margin: The minimum margin needed to keep a position open—falling below this triggers liquidation
Position Cost: Total frozen assets including initial margin and potential trading fees

2. Margin Calculation Formulas

USDT-Margined Contracts:

Margin = Entry Price × Position Size × Contract Face Value / Leverage

Coin-Margined Contracts:

Margin = Position Size × Contract Face Value / (Leverage × Entry Price)

Practical Examples:

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USDT Example
Using 200x leverage to open 10,000 BTC/USDT contracts at $50,000/BTC (face value: 0.0001 BTC per contract):

(10,000 × 0.0001 × 50,000) / 200 = 250 USDT margin

Coin Example
Using 125x leverage to open 100 BTC/USD contracts at $50,000/BTC (face value: $100 per contract):

100 × 100 / (50,000 × 125) = 0.0016 BTC margin

3. Profit/Loss Components

Trading P/L derives from three sources:

3.1 Trading Fees

Taker Fee: Position Value × Taker Rate
Maker Fee: Position Value × Maker Rate

3.2 Funding Rates

Paid/received based on funding rate (±) and position direction
```
Funding Cost = Rate × Position Value
```

3.3 Position P/L Calculations

USDT-Margined Positions

Long P/L = (Exit Price - Entry Price) × Size × Face Value  
Short P/L = (Entry Price - Exit Price) × Size × Face Value

Coin-Margined Positions

Long P/L = (1/Entry - 1/Exit) × Size × Face Value  
Short P/L = (1/Exit - 1/Entry) × Size × Face Value

Complete Trade Example
Opening 10,000 BTC long at $50,000 (Taker) then closing at $60,000 (Maker):

Entry Fee: 50,000 × 10,000 × 0.0001 × 0.02% = 10 USDT  
Funding Earned: 50,000 × 10,000 × 0.0001 × (-0.025%) = 12.5 USDT  
P/L: (60,000-50,000) × 10,000 × 0.0001 = 10,000 USDT  
Total Profit: 10,000 - (-12.5) - 10 = 10,002.5 USDT

4. Key Considerations

Funding calculations use current fair price
Actual platform rules may vary
Interface differences exist across operating systems

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FAQ

Q: How does leverage affect margin?
A: Higher leverage reduces margin requirements proportionally—but increases liquidation risks.

Q: When is funding paid/received?
A: During periodic settlements (typically every 8 hours), based on position direction and rate sign.

Q: Why do inverse contracts calculate differently?
A: Coin-margined positions account for BTC price fluctuations affecting collateral value differently than USDT contracts.

Q: What's the biggest margin mistake?
A: Forgetting maintenance requirements can lead to unexpected liquidations during volatility.

Disclaimer: This content provides general information only—not investment advice. Trading involves substantial risk.