Open Cost calculation
Last updated
Last updated
Calculating the cost of opening a Limit Order:
1. Calculate the Initial Margin
Initial Margin
= Notional Value / Leverage Multiplier
=(102,990.0*1 BTC)/20x
=5,149.50
2. Calculate Open Loss
Open Loss = Number of Contracts × Absolute Value {min [0, Order Direction × (Mark Price — Order Price)]}
Direction of order: 1 for long order；-1 for short order
Open Loss of long order
= Number of Contract * Absolute Value {min[0, Direction of order * (Mark price — Order Price)]}
= 1 * Absolute Value {min[0, 1 * (102,988.4- 102,990.0)]}
= 1 * Absolute Value {min[0, (-1.6)]}
= 1 * 1.6
= 1.6
Open loss occurs when you place a long order.
Open Loss of Short Order
= Number of Contract * Absolute Value {min[0, Direction of order * (Mark Price — Order Price)]}
= 1 * Absolute Value {min[0, -1 * (102,988.4- 102,990.0)]}
= 1 * Absolute Value {min[0, 1.6]}
= 1 * 0
= 0
Open loss does not occur when you place a Short order.
3. Calculate the cost of Opening a Position
Since there is no Open Loss when you place a Short order, the cost of opening a Short order is equal to the Initial Margin.
Cost of opening a Long Order
= 5,149.50+ 1.6
=5,151.1
Cost of opening a Short Order
=5,149.50 + 0
= 5,149.50
Since an Open Loss occurs when you place a Long order, it costs more to place a Long order. In addition to the Initial Margin, you must also take into account the Open Loss.
1. Calculate Estimated Entry Price
Long order estimated entry price = ask[0] * (1 + 0.05%); Short order estimated entry price = max(bid[0], mark price)
Estimated entry price of long order
=ask[0]*(1 + 0.05%)
=102,946.8*(1 + 0.05%)
= 102,998.27
*[0]：Level 1 price
Assuming price of short order
= max(bid[0], mark price)
= max (102,946.9, 102,941.0)
= 102,946.9
*[0]：Level 1 price
2. Calculate the Initial Margin
Initial Margin = Notional Value / Leverage Multiplier
Initial margin for long order
= Estimated entry price of long order * Number of Contracts / Leverage Multiplier
=102,998.27 * 1 /20
=5,149.9135
Initial margin for short order
= Estimated entry price of short order * Number of Contracts / Leverage Multiplier
=102,946.9 * 1/20
=5,147.345
3. Calculate the Open Loss
Open Loss = Number of Contract * Absolute Value {min[0, direction of order * (mark price — order price)]}
Direction of order: 1 for long order；-1 for short order
Open loss for long order
= Number of Contract * Absolute Value {min[0, direction of order * (mark price — order price)]}
= 1 * Absolute Value {min[0, 1 * (102,941.0–102,998.27)]}
= 1 * Absolute Value {min[0, -57.27]}
= 1 * 57.27
= 57.27
An Open Loss occurs when you place a Long order.
Open loss for short order
= Number of Contract * Absolute Value {min[0, direction of order * (mark price — order price)]}
= 1 * Absolute Value {min[0, -1 * (102,941.0–102,946.9)]}
= 1 * Absolute Value {min[0, 5.9]}
= 1 * 0
= 0
An Open Loss does not occur when you place a Short order.
4. Calculating the cost of Opening a Position
Since Open Loss occurs when you place a Long order, it costs more to place a Long order. In addition to the Initial Margin, you must also take into account the Open Loss.
Cost of opening a Long Order
=5,149.9135+57.27
=5,207.1835
Cost of opening a Short Order
=5,147.345+0
=5,147.345
Since there is no Open Loss when you place a short order, the cost of opening a Short order is equal to the to the Initial Margin. Initial Margin.
