• Margin - Risk Limits

    Overview

    At BaseFEX, risk limits are implemented on all trading accounts to minimize the occurrence of large liquidations on margined contracts.

    In case some users amass larger positions, they pose a risk to others on the exchange who may experience Auto-Deleveraging if the position cannot be fully liquidated. The Step model helps avoid this through increasing margin requirements for large positions.

    Dynamic Risk Limits

    Every contract has a Base Risk Limit and Step. Combined with the base Maintenance Margin and Initial Margin requirements, these numbers are used to calculate the full margin requirement at each position size.

    If the position size increases, the maintenance, and initial margin requirements will increase as well. Users must authorize a higher or lower risk limit on the Positions panel. Margin requirements will automatically increase and decrease as your risk limit changes.

    Instrument Risk Limits

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    Formulas

    Contract settled by BTC, then Q = 0.005%
    Contract settled by USDT, then Q = 0.0000005%
    Term Formula BTCUSD Example (200 BTC)
    New Maintenance Margin % MM = M + MAX(0, Position Value - R) * Q 0.5% + MAX(0, 200 - 100) * 0.005% = 1.00%
    New Initial Margin % IM = I + MAX(0, Position Value - R) * Q 1.00% + MAX(0, 200 - 100) * 0.005% = 1.50%
    Maintenance Margin New MM * Gross Position Value 1.00% * 200 BTC = 2 BTC
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