How to calculate margin requirements and leverage

Margin can be considered as a ‘required deposit’. It also means that if the trader suffers a loss, they have enough cash with the PrimeXBT to cover that loss.

Margin required = total value of trade/ leverage

Example:

Let us assume that a trader wants to buy a position of 1 Bitcoin worth $7264 on PrimeXBT platform.

To obtain the margin required for the trade, the trader would have to divide the total value of the transaction by the leverage provided for the trade.

The value of your long position is priced at $7,264. Therefore, the margin amount required for the trade at 1:100 leverage is calculated as:

($7,264/100) = $72.64

Therefore, to be able to trade a contract value based on the BTC/USD price of $7,246 at 100X leverage, you will need at least $72.64 of deposit value.

Please note, that a trader should never open a position while utilizing maximum leverage, otherwise, they risk of being stopped out in case the market moves opposite direction.

As the price for Bitcoin/USD changes, so also the margin amount will change. However, the calculation above can always be used to obtain the margin required for trading the BTC/USD pair.