Margin Trading Concepts

Phemex provides you with a variety of order types to accommodate all your needs. Below is a list of every order type with a quick description. Market orders Market orders are performed immediately at current market prices. A user may prefer this option for urgent orders. We recommend paying attention to the order book when opting for type of action. It is possible that a large market order may incur market-impact costs. Limit orders Limit orders specify the maximum or minimum price that you are willing to buy or sell at. This order type helps minimize trading costs. However, limit...

The following is a list of terms and explanations commonly associated with margin trading. Wallet Balance Your wallet balance is the total of your Deposits plus Realised PNL minus your withdrawals. Unrealized PNL This is a calculation of the current profit and loss (PNL) of all your open positions. Margin Balance Is the total amount of equity you have within the exchange (the sum of your wallet balance plus your unrealized PNL). Position Margin The percentage of your margin balance that is allocated to the initial margin requirements of your open positions. It can be calculated as the entry value...

Every Phemex user has access to a BTC wallet and two types of Trading Accounts: a BTC Trading Account and a USD Trading Account. For contracts that settle in BTC, users can trade using their BTC Trading Account. For contracts that settle in USD, users can trade using their USD Trading Account. After making a deposit into the BTC wallet, users must then transfer or fund the individual trading accounts that they wish to trade with. Click How do I fund my Contract Trading Accounts to read more information on the funding trading accounts. When funding a USD Trading Account,...

Phemex provides two types of margin options to help its users better manage risks and funds. Isolated Margin In Isolated Margin mode, a user’s loss is limited to the initial amount of margin allocated to a position. The remaining funds are isolated from open positions. In other words, any available balance not specifically allocated to a position will not be automatically used to prevent liquidations. However, the Positions Panel still allows users to manually assign more margin to target positions. This helps to prevent liquidations during volatile market scenarios. Cross Margin In Cross Margin mode, the entire available balance is automatically...

Slippage Protection is a mechanism that shields a user’s positions from immediate liquidations and high-risk situations when filling orders. The goal is to prevent users from experiencing execution prices outside of their expectations. In other words, it minimizes an order’s ability to execute at increasingly detrimental prices. Slippage protection activates when traders use Market Orders. Consider the following scenario: When a user opens a position with a Market Order, if the order is large enough, it may have to fill across multiple ticks. This discrepancy between the trader’s expected price and the actual executed price is known as ‘slippage’. The...

The process of calculating your Liquidation Price varies based on the type of contract you hold. Below are all of the relevant equations for each type of possible contract. Please note that your Initial Margin will vary depending on whether you use Cross Margin or Isolated Margin. Cross Margin applies the entirety of your available funds, whereas Isolated Margin must be calculated by dividing the Open Value by the Leverage used. Cross Margin: Initial Margin = Total Margin Isolated Margin: Initial Margin = Open Value/Leverage Inverse Contract Long Liquidation Value = Open Value – Maintenance Margin + Initial Margin Liquidation...

When Margin Trading and using Leverage on Phemex.com, there are two key terms you must understand in order to calculate the total amount of funds you should have prior to opening a position. Initial Margin The Initial Margin is the amount or percentage of your funds that you must allocate to open a position. Minimum initial margin requirements will vary depending on what Symbol you are trading and how much Leverage you are using. Maintenance Margin Maintenance Margin is the amount of funds you must maintain in your account in order to keep your positions open. Minimum maintenance requirements will vary...

Liquidation is the process of closing a trader’s position due to the loss of all, or nearly all, of the trader’s Initial Margin. On Phemex, your position is automatically closed if the mark price reaches your liquidation price. Long positions have a liquidation price lower than the original entry price and vice versa for short positions. Contracts on Phemex can be highly leveraged. To keep these positions open, you are required to hold a percentage of the value of the position on the exchange, known as the Maintenance Margin. If you cannot fulfill your maintenance requirements, your positions will be...

Leverage is an investment strategy that helps traders amplify returns by using borrowed funds or other financial assets. However, as much as the potential for returns is amplified, so is the potential risk for losses. Leverage equals the ratio between the total value of the position and the minimum investment required (margin). How does this apply to Phemex? On Phemex.com, you can trade Perpetual Contracts with up to 100x leverage. You begin by allocating a certain margin or portion of your funds to open a position. Then, you choose the amount of leverage you wish to use. We adjust your Liquidation Price...

Phemex employs a fair price marking mechanism. This method is also commonly used by many other crypto exchanges to prevent malicious activities or low market liquidity. This is why Phemex uses the mark price instead of the last traded price to avoid liquidations due to low liquidity or manipulation. There are two types of margin related to an open position. The Initial Margin is the amount or percentage of your funds that you must allocate to open a position. The Maintenance Margin is the amount of funds you must maintain in your account in order to keep your positions open....