# Costs of Opening Positions
### **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 orders:**
\= 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 orders:**
\= 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 placing a long order results in an open loss, it requires more margin than a short order. In addition to the initial margin, you must also take into account the open loss.
### **Cost of Opening a Market Order**
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 orders:**
\= ask\[0]\*(1 + 0.05%)
\= 102,946.8\*(1 + 0.05%)
\= 102,998.27
\*\[0]：Level 1 price
**Assuming price of short orders:**
\= 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 orders
\= Estimated entry price of long order \* Number of Contracts / Leverage Multiplier
\= 102,998.27 \* 1 /20
\= 5,149.9135
* Initial margin for short orders
\= 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. #### **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 initial margin.
