How to calculate Bybit leverage fee

How to Calculate Bybit Leverage Fee

Bybit, a leading cryptocurrency derivatives exchange, offers traders the ability to trade with leverage, allowing them to amplify their profits and losses. However, it is crucial to understand how leverage fees are calculated to trade effectively on Bybit. This comprehensive guide will provide a step-by-step breakdown of how Bybit determines leverage fees.

1. Determine the Funding Rate

The funding rate is the periodic fee charged to traders holding leveraged positions. It ensures that the market remains balanced between buyers (long positions) and sellers (short positions). The funding rate is determined by the difference between the perpetual contract price and the underlying index price.

2. Calculate the Position Size

The position size refers to the notional value of your leveraged trade. It is calculated by multiplying the contract value by the leverage applied. For example, if you trade a contract worth $10,000 with 5x leverage, your position size would be $50,000.

3. Determine the Leverage Fee Rate

Bybit charges a fixed leverage fee rate of 0.01% every 8 hours. This means that for every $1,000 of your position size, you will be charged a fee of $0.01 every 8 hours.

4. Calculate the Daily Leverage Fee

To calculate the daily leverage fee, multiply the leverage fee rate by your position size and divide the result by 3. This calculation is done because the funding rate is charged every 8 hours, and there are 3 eight-hour periods in a day.

Daily Leverage Fee = (Leverage Fee Rate x Position Size) / 3

5. Determine the Maintenance Margin Requirement

The maintenance margin requirement is the minimum equity you must maintain in your account to keep your leveraged position open. It is typically set at 10% of the position size. For example, if your position size is $50,000, the maintenance margin requirement would be $5,000.

6. Monitor Your Leverage Fee Balance

Bybit provides real-time updates on your leverage fee balance. You can track your balance in the "Positions" section of your trading interface. Ensure you maintain sufficient funds in your account to cover the leverage fees.

7. Pay the Leverage Fee

Leverage fees are automatically deducted from your trading account. If your account balance falls below the maintenance margin requirement, your position may be liquidated to cover the fees.

8. Close Your Position

When you close your leveraged position, the remaining leverage fees will be settled. If you have incurred any losses, these will also be deducted from your account. If you have made profits, the profits will be credited to your account after deducting the leverage fees.