Crypto Trading Nuances: How to Optimise Your Margin

What Role Does Margin Play?

How To Calculate the Optimal Margin

  1. Decide on your strategy’s absolute maximum position. Your liquidation point is effectively when your position’s unrealised loss has matched your remaining margin, and the maximum position helps determine what you could lose. Note that the liquidation point described here is simplistic, as there are more considerations like maintenance margin.
  2. Find the largest probable price percentage change you could experience. To be as safe as possible, we would take our assumed longest holding time as our worst-case scenario. For example, say we would not be in our max position longer than one hour. We can then look at all the one-hour periods in the past and determine the maximum price movement that can occur.
  3. Calculate your max potential loss. We can calculate this by calculating the unrealised P&L using the max position and the largest probable price % change above. Calculating P&L varies for each type of product, but each exchange will usually show you how to calculate the P&L for their offerings.




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