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How to deduct the overnight fee for perpetual contract?
To calculate the overnight fee for perpetual contracts, the interest rate differential, position size, and number of days held must be factored in.
Dec 04, 2024 at 11:03 am
How to Deduct the Overnight Fee for Perpetual Contract?
Perpetual contracts are a type of derivative financial instrument that allows traders to take leveraged positions on the future price of an underlying asset without the need to take ownership of the asset itself. One of the key characteristics of perpetual contracts is that they have an overnight funding rate, which is a fee that is charged or paid to traders depending on the direction of their position.
How is the overnight fee calculated?
The overnight fee is calculated based on the following formula:
Overnight Fee = (Interest Rate Differential / 365) x Position Size x Number of Days- Interest Rate Differential: This is the difference between the interest rate in the base currency and the interest rate in the quote currency.
- Position Size: This is the size of the trader's position, measured in the base currency.
- Number of Days: This is the number of days that the position is held overnight.
When is the overnight fee charged or paid?
The overnight fee is charged or paid at 8:00 AM UTC every day. If the trader has a long position, they will pay the overnight fee. If the trader has a short position, they will receive the overnight fee.
How to deduct the overnight fee from your account?
To deduct the overnight fee from your account, follow these steps:
- Log in to your trading account.
- Navigate to the "Positions" tab.
- Select the perpetual contract that you want to deduct the overnight fee from.
- Click on the "Deduct Overnight Fee" button.
- Enter the amount of the overnight fee that you want to deduct.
- Click on the "Deduct" button.
What happens if I don't deduct the overnight fee?
If you do not deduct the overnight fee from your account, your trading account will be charged a penalty fee. The penalty fee is typically a higher interest rate than the overnight fee.
Here are some additional tips for deducting the overnight fee:
- Make sure that you have sufficient funds in your account to cover the overnight fee.
- Deduct the overnight fee before the daily settlement time of 8:00 AM UTC.
- Keep track of your overnight fees so that you can avoid paying any unnecessary penalty fees.
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