Bitcoin Forum

Hello everyone, I'm new here and I need help with margin trading. I just can't figure out how to calculate losses in margin trading

 Lets say we have this trade :

Type: long/ Leverage: 3/ Margin: 1102.25/ Amount:0.49 BTC /Open price: 6613.5/ Close price: 6540.1/ Stop loss: 6457 Fee: 2.88

How much should be the loss and how do you calculate this correctly?


Thanks

any one?

I am not that knowledgeable in trading, but I think margin is the amount you are investing when leveraging. And it would be multiplied with funds borrowed from your broker.
This should be a helpful article, https://www.investopedia.com/university/margin/

(Open price - Close price) x (Position size) = Profit/Loss. So in this case: $73.40 x 0.49 BTC = $35.97 Loss.

Then account for $2.88 trading fees = $38.85 Total loss.

I'm slightly confused though because $1102.25 collateral at 3x leverage should buy 0.5 BTC. A 0.5 BTC position would yield a $39.58 loss.

Well that's how I thought it will be calculated and the loss will be $40 , but the exchange deducted $963.33  from my account  as loss (P\L)!
 that's why I was confused and thought maybe I'm missing something!
why did I lose that much?

That doesn't sound right at all.

What exchange? Have you contacted support? If you closed position as stated and realized a $963.33 loss, you should contact them ASAP.

Recovering 10-15% of initial equity might be normal if you got margin called. For example, on Bitfinex, when your account falls below 15% of the initial position value, you get force-liquidated. But at 3x leverage, you shouldn't have been anywhere close to a margin call.

Also, remember that the leverage is 3. So take the loss times 3. The broker might have overnight interest rates but they shouldn't be that large.

It's different in leveraging. Margin trading is also known as short selling. You're selling the borrowed trade and sell it now or the market price as you have a bias that it will go down then you will return the borrowed to the broken when you buy it in the lower price you expected. Your loss if it doesn't happen that way and the price goes up. But your correct in borrowing in your brokers for a certain shares or units. Though in leveraging the trade that you borrowed will be multiplied by your choice ranging from 1:5; 1:20 or even 1:500. This is a double edge as you will also lose by this much if you opted depending on your selection.

No, because we can see the position size already reflects the leverage. If the position were only worth his equity ($1102.25) then the position size would only be 0.16667 BTC.

There is the issue of interest on the leverage, but it should be pretty minuscule vs. the stated $963.33 loss.

Margin trading is use leverage and the function of this leverage is to increase the percentace of profit and also the risk, for example if you use 3x leverage and the price increase 5%, if you been make open potition long so you will make profit 15%, but if you been make open potition short so you will loss 15% too. There are calculator in futures trading platform to calculate all of this.

The amount of loss will be according to level of stop loss and leverage that you use.  In trading view charting there are tool that we can use to calculate profit and loss,  and just multiplied that percentace of loss with leverage.

I usually doing margin trading in Metatrader platform , and to calculate loss and profit is very easy in here , just drag from the line of open transaction and we will know profit and loss in amount of USD.  And also available trailling stop automaticly in Metatrader that make easy to trade.