Understanding Single-Cryptocurrency Cross Margin Trading
1. Profit Calculation Methods
A. Trading Currency as Margin (Long Position)
When using trading currency as collateral for long positions, profits are calculated in the trading currency using both mark price and last price:
- Mark Price Profit = Position Value - (Liabilities + Interest) / Mark Price
- Last Price Profit = Position Value - (Liabilities + Interest) / Last Price
B. Quote Currency as Margin (Long Position)
For long positions collateralized by quote currency:
- Mark Price Profit = (Position Value × Mark Price) - (Liabilities + Interest)
- Last Price Profit = (Position Value × Last Price) - (Liabilities + Interest)
C. Quote Currency as Margin (Short Position)
Short position profits with quote currency margin:
- Mark Price Profit = Position Value - (Liabilities + Interest) × Mark Price
- Last Price Profit = Position Value - (Liabilities + Interest) × Last Price
D. Trading Currency as Margin (Short Position)
Short positions using trading currency margin:
- Mark Price Profit = (Position Value / Mark Price) - (Liabilities + Interest)
- Last Price Profit = (Position Value / Last Price) - (Liabilities + Interest)
2. Return Rate Calculation
Return Rate = Profit / Initial Margin
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Single-Crypto/Cross-Crypto/Portfolio Margin Isolated Trading
1. Profit Determination Methods
A. Long Position Profits
Calculated using both pricing methods:
- Mark Price Profit = Position Value - Margin - (Liabilities + Interest) / Mark Price
- Last Price Profit = Position Value - Margin - (Liabilities + Interest) / Last Price
B. Short Position Profits
Short position calculations:
- Mark Price Profit = Position Value - Margin - (Liabilities + Interest) × Mark Price
- Last Price Profit = Position Value - Margin - (Liabilities + Interest) × Last Price
2. Return Rate Formula
Return Rate = Profit / Initial Margin
Key Trading Considerations
By incorporating both mark price and last traded price in profit calculations, traders gain comprehensive insights into position performance:
- Mark Price reduces impact of abnormal market volatility
- Last Price provides precise trading profit information
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FAQ Section
Q1: What's the difference between mark price and last price?
A: Mark price uses index-based valuation to prevent manipulation, while last price reflects the most recent actual trade execution.
Q2: How often should I check my leverage position P&L?
A: Professional traders typically monitor positions hourly, adjusting strategies based on market conditions and risk tolerance.
Q3: Why do isolated margin positions show different returns than cross margin?
A: Isolated margin isolates risk per position, while cross margin pools collateral across positions, affecting liquidation thresholds and profit calculations.
Q4: How is interest calculated on leveraged positions?
A: Interest accrues hourly based on your borrowed amount and the platform's current borrowing rate for that asset.
Q5: What's the safest way to start with leverage trading?
A: Begin with small positions (2-3x leverage) using isolated margin to limit risk while learning the mechanics.
Q6: Can I change margin type after opening a position?
A: Most platforms require closing and reopening positions to switch between cross and isolated margin types.