How to calculate BigONE’s margin handling fee?

To calculate BigONE's margin handling fee, traders need to consider the overnight funding rate, which is based on the applicable interest rate and position status, and the order execution fee, which is a percentage of the order value.

Nov 27, 2024 at 07:39 am

How to Calculate BigONE's Margin Handling Fee?

Margin trading is a popular way to trade cryptocurrencies with leverage, allowing traders to amplify their potential profits but also their potential losses. BigONE, a leading cryptocurrency exchange, offers margin trading services with competitive fees. Understanding how to calculate BigONE's margin handling fee is crucial for traders to optimize their trading strategy and manage their risks effectively.

1. Understanding BigONE's Margin Handling Fee Structure

BigONE's margin handling fee consists of two components:

• Overnight Funding Rate: A daily fee charged on open margin positions, based on the applicable interest rate for the traded asset and the borrowing or lending status of the position.
• Order Execution Fee: A fee charged when a margin order is executed, based on the order's size and the trading pair used.

2. Calculating the Overnight Funding Rate

The overnight funding rate for a given asset is typically displayed in the trading interface and can vary depending on market conditions. To calculate the daily overnight funding rate:

• Determine the applicable interest rate: BigONE provides an hourly interest rate for each asset available for margin trading.
• Multiply the interest rate by the notional value of the position: The notional value is the value of the underlying asset if the position was closed at the current market price.
• Adjust for the borrowing or lending status: If the position is a long position (leveraging to buy the asset), the funding rate is charged. If the position is a short position (leveraging to sell the asset), the funding rate is received.

3. Calculating the Order Execution Fee

The order execution fee for a given trading pair is displayed in the trading interface and is typically a percentage of the order value. To calculate the order execution fee:

• Determine the order execution fee rate: The rate varies depending on the trading pair and the type of order (maker or taker).
• Multiply the fee rate by the notional value of the order: Similar to the overnight funding rate calculation.

4. Example Calculation

Consider a trader who opens a long position of 10 BTC with 5x leverage on BigONE. The applicable overnight funding rate is 0.01% and the order execution fee rate is 0.1%.

• Overnight Funding Rate (daily):
• BTC x $40,000/BTC x 0.01% x 1 day = $4
• Order Execution Fee:
• BTC x $40,000/BTC x 0.1% = $40

Therefore, the total margin handling fee for this trade, for one day, would be $4 (overnight funding) + $40 (order execution) = $44.

5. Considerations for Margin Handling Fees

• Hourly Basis: Overnight funding rates are typically calculated on an hourly basis.
• Compounded Effect: Margin handling fees can compound over time, especially for long-term positions.
• Impact on Profitability: Traders should factor in margin handling fees when calculating potential profits or losses.
• Varying Fees: Fees for different assets, trading pairs, and leverage levels may vary. Traders should always consult the BigONE trading interface for up-to-date information.
• Careful Management: Proper management of margin handling fees is crucial for optimizing trading performance.