Why Does the Position Margin of a Perpetual Contract Decrease Without Reducing the Position?
Last updated
Last updated
Many users of perpetual contracts encounter confusion about why their position margin fluctuates, decreasing or increasing, even when they haven’t reduced their position. This is primarily due to the funding fee mechanism of perpetual contracts and the fluctuations in market prices.
Funding Fee Mechanism
SAFEX perpetual contracts use a funding fee mechanism to keep the perpetual contract market price anchored to the spot price.
The funding fee is charged every 8 hours, with the charging times at 08:00, 16:00, and 24:00 (HKT). Users only need to pay or receive the funding fee if they hold a position at these times. If the position is closed before the fee is charged, the user will not need to pay the funding fee.
Funding Fee = Position Value * Current Funding Rate When the funding rate is positive, long positions pay short positions. When the funding rate is negative, short positions pay long positions. This means that users holding perpetual contract positions may either be charged a funding fee or receive one. The actual funding fee a user can receive depends on the total amount deducted from the counterparty’s account by the system.
In Cross Margin Mode: Position Margin = Contract Value * Number of Contracts * Latest Mark Price / Leverage. Therefore, the user’s opening margin will change as the price fluctuates, and the funding fee has a minor effect on the margin.
SAFEX does not charge any funding fees; funding fees are collected between users.
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