AscendEX contract calculation formula

Understanding the AscendEX contract calculation formula, which determines profit or loss, is crucial for successful trading on the platform.

Nov 25, 2024 at 09:55 am

AscendEX Contract Calculation Formula: A Comprehensive Guide

Introduction

Understanding the calculation formula for contracts is crucial for successful trading on AscendEX. This formula determines the profit or loss you incur on your trades. This guide provides a comprehensive explanation of the AscendEX contract calculation formula, covering all the essential aspects to empower you with the knowledge to make informed trading decisions.

Step 1: Identifying Contract Specifications

• Contract Size: The notional value of a single contract. For example, a BTCUSD contract with a contract size of 100 USD means that each contract represents 100 USD worth of Bitcoin.
• Leverage: The ratio of borrowed funds to your own capital. For instance, a leverage of 10x indicates that for every 1 USD you invest, you have access to 10 USD in trading capital.
• Mark Price: The average price of a contract across all exchanges. This price is used to calculate profits and losses.

Step 2: Calculating Initial Margin

• Initial Margin: The minimum amount required in your trading account to open a position. This amount is determined by the contract size, leverage, and Mark Price.
• Formula: Initial Margin = Contract Size x Leverage x (Mark Price / 100)

Step 3: Determining Position Value

• Position Value: The total value of your position. This value is used to calculate the profit or loss.
• Formula: Position Value = Contract Size x Mark Price

Step 4: Calculating Floating Profit or Loss (FPL)

• FPL: The unrealized profit or loss on your open position.
• Formula: FPL = (Current Mark Price - Entry Mark Price) x Position Value
• Loss: If the current Mark Price is lower than the Entry Mark Price, the FPL is negative, indicating a loss.
• Profit: If the current Mark Price is higher than the Entry Mark Price, the FPL is positive, indicating a profit.

Step 5: Determining Margin Requirement

• Maintenance Margin: The minimum margin required to keep your position open. If your margin falls below this level, you will receive a Margin Call.
• Formula: Maintenance Margin = Initial Margin x Maintenance Margin Ratio

Step 6: Understanding Liquidation

• Liquidation: Forced closure of your position by the exchange due to insufficient margin. This occurs when your margin falls below the Maintenance Margin.
• Formula for Liquidation Price: Liquidation Price = Entry Mark Price +/- (Initial Margin / Position Value) x % Deviation

Conclusion

The AscendEX contract calculation formula is a complex but essential aspect of contract trading. By understanding the steps outlined in this guide, you can accurately calculate your initial margin, position value, floating profit or loss, margin requirement, and liquidation price. This knowledge empowers you to make informed trading decisions and manage your risk effectively.