When placing an order, margin is reserved for:
- Margin for the order
- Trading Fees
The margin requirement while placing an order is the Initial Margin
Order Margin = Order Size * Notional Value of 1 contract x Initial Margin%
Initial Margin% can vary from contract to contract and is specified in the contract specification
At Delta we use margin scaling
which means as order/ position size increases, the margin requirement increases too.
Current Initial Margin% = Initial Margin% + Slope_IM * (Order Size – Order Threshold)
What happens when you already have an open position/orders?
Delta Exchange uses Isolated Margin System
. Therefore, all open positions have dedicated margin associated with it. But all open orders on a contract share a pool of margin that supports all of them. Due to this:
- All orders open in a selected contract are at the same leverage.
- Margin offsetting occurs. All open position and open orders, including the one being placed, are considered. Opposite side position and open orders are netted and the margin for supporting the open position and open orders is computed. This offsetting reduces the margin requirement considerably.
For example, John places a long order for 100 BTCUSD contracts at 10x leverage. Margin is blocked and the order becomes a position. Now, John places a short order for 100 BTCUSD at 10x leverage. Since John already has an open position in the opposite direction in this contract, NO margin
is required to place this order. This is Margin Offsetting.
When placing an order trading fees are reserved in advance. Depending on the type of order that is executed traders are charged with either Taker Fees or Maker Fees. Reservation of Fees occur when:
- An order becomes a position
- On closing a position
Therefore with each order, estimated trading fees for opening execution (order becomes a position) and closing execution (position is closed) are reserved. Click here to know more about Make and Taker Fees
Trading Fees Reserved = (Quantity x Entry_Price x Fee) + (Quantity x Exit_Price x Fee)
*Entry_Price and Exit_Price are estimated using the order characteristics and prevailing prices.
Hence, the margin reserved includes Order Margin + Trading Fees Reserved.