# Futures Trading

## Step 1: Opening a Position

**Action**: The user opens a perpetual futures position by providing collateral in USDT and selecting leverage. The platform calculates required margin and maximum position size.

**Formula**:

* $$Maximum Position Size = Collateral × Leverage$$
* $$Required Margin = Position SizeLeverage$$
* $$Initial Margin Ratio = 1Leverage$$

**Example**:

* Collateral: `1000 USDT`
* Selected leverage: `5x`
* Maximum position size: `1000 × 5 = 5000 USDT`
* Required margin: `5000 ÷ 5 = 1000 USDT`
* Initial margin ratio: `1 ÷ 5 = 20%`

**Outcome**: Position is opened with specified parameters, and the required margin is locked as collateral.

## Step 2: Position Management

**Action**: The user manages their position by monitoring and adjusting risk parameters. The platform continuously calculates position PnL and margin ratios.

**Formula**:

* $$Unrealized PnL = (Current Price - Entry Price) × Position Size × Side$$
  * Side = -1 for shorts, 1 for longs,
* $$Margin Ratio = (Collateral + Unrealized PnL)Position Size$$
* $$Liquidation Price = Entry Price × (1 ± Maintenance Margin Ratio × Leverage)$$
  * \+ for shorts, - for longs

**Example**:

* Entry price: `2000 USDT`
* Position size: `5000 USDT (2.5 units)`
* Current price: `2100 USDT`
* Long position PnL: `(2100 - 2000) × 2,5 = 250 USDT`
* New margin ratio: `(1000 + 250) ÷ 5000 = 25%`

**Outcome**: Position status updated in real-time with current PnL and risk metrics.

## Step 3: Fee Calculation

**Action**: The platform calculates and charges trading fees based on position size and holder status.

**Formula**:

* $$Standard Fee = Position Size × Base Fee Rate$$
* $$Discounted Fee = Position Size × Base Fee Rate × (1 - Discount Rate)$$

**Example**:

* Position size: `5000 USD`
* Base fee rate: `0,1%`
* Standard fee: `5000 × 0,001 = 5 USDT`
* Additional discounts: `20%`
* Discounted fee: `5 × (1 - 0,2) = 4 USDT`

**Outcome**: Fees are automatically deducted from the user's account.

## Step 4: Position Closure

**Action**: The user closes their position either manually or through automated triggers (take-profit/stop-loss).

**Formula**:

* $$Realized PnL = (Exit Price - Entry Price) × Position Size × Side - Total Fees$$
* $$ROE (Return on Equity) = Realized PnLInitial Margin × 100%$$

**Example**:

* Entry price: `2000 USDT`
* Exit price: `2100 USDT`
* Position size: `5000 USDT`
* Total fees: `8 USDT (entry + exit)`
* Realized PnL: `(2100 - 2000) × 2,5 - 8 = 242 USDT`
* ROE: `242 ÷ 1000 × 100% = 24,2%`

**Outcome**: Position is closed, PnL is realized, and funds are returned to the user's available balance.

## Step 5: Position Liquidation

**Action**: The platform automatically liquidates a user's position if the margin ratio falls below the maintenance margin requirement to prevent insolvency.

**Formula**:

* Liquidation Price (for longs):$$\text{Liquidation Price} = \text{Entry Price} \times \left(1 - \frac{\text{Initial Margin Ratio} - \text{Maintenance Margin Ratio}}{\text{Leverage}}\right)$$
* Liquidation Price (for shorts):\
  $$\text{Liquidation Price} = \text{Entry Price} \times \left(1 + \frac{\text{Initial Margin Ratio} - \text{Maintenance Margin Ratio}}{\text{Leverage}}\right)$$

**Example**:

* Entry Price: `2000 USDT`
* **Position Size**: `5000 USDT (2.5 units)`
* **Leverage**: `5x`
* **Maintenance Margin Ratio**: `2%`
* Liquidation price for a **long** position:\
  $$2000 \times \left(1 - \frac{0.20 - 0.02}{5}\right) = 2000 \times 0.96 = 1920 , \text{USDT}$$
* Liquidation price for a **short** position:\
  $$2000 \times \left(1 + \frac{0.20 - 0.02}{5}\right) = 2000 \times 1.04 = 2080 , \text{USDT}$$

**Outcome**: If the market price reaches the liquidation price, the platform closes the position at the current market price.


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