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How much margin is needed for Huobi futures contracts to avoid liquidation?

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2024-07-02 11:17:57800browse

Huobi contract liquidation is a forced liquidation caused by insufficient margin. In order to avoid liquidation, the margin ratio is recommended: no less than 10% for mainstream currency contracts and no less than 20% for non-mainstream currency contracts. Margin calculation formula: margin required for liquidation = contract value / (1 - stop loss rate / opening price). A high margin ratio helps reduce the risk of liquidation. The leverage ratio of contract trading is high, and returns and risks coexist, so margins need to be managed carefully.

How much margin is needed for Huobi futures contracts to avoid liquidation?


How much margin is needed for Huobi futures contracts to avoid liquidation?

Huobi futures liquidation refers to a situation where the loss of a contract position reaches a certain level, resulting in insufficient margin and forced liquidation by the system. In order to avoid liquidation, you need to control the use of margin.

Mechanism of margin and liquidation

Huobi futures trading adopts a margin system, that is, users only need to pay part of the funds (margin) as collateral to enlarge the transaction. The amount of margin is directly related to the risk of liquidation.

Margin Ratio = Margin / Contract Value

When the contract loss is greater than the margin, a liquidation will occur. The liquidation price refers to the price when the contract loss reaches the margin amount.

Calculate the margin required for liquidation

Assume that the contract opening price is $10,000, the leverage is 10 times, and the planned stop loss price is $9,500.

Contract value = 10,000 USD * 10 times = 100,000 USD Liquidation price = 9,500 USD

Margin required for liquidation = Contract value / (1 - Stop loss rate / opening price) Margin required for liquidation = 100,000 USD / (1 - 9,500 USD / 10,000 USD) = 100,000 USD

Margin Recommendation

In order to minimize the risk of liquidation, it is recommended to use a higher margin ratio. Huobi contracts have different margin requirements for different contracts. General recommendations:

Mainstream currency contracts: the margin ratio is not less than 10%. Non-mainstream currency contracts: the margin ratio is not less than 20%. Risk reminder

The leverage multiple of contract trading is higher High, which not only magnifies the benefits but also magnifies the risks. Once a liquidation occurs, you will not only lose your margin, but may also cause additional losses. Therefore, before participating in contract transactions, you must fully understand the risks, set stop losses reasonably, and manage margins carefully.

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