How to calculate DigiFinex leverage fee

To calculate the DigiFinex leverage fee, multiply the loan amount by the daily interest rate (annual interest rate divided by 365 days) and then multiply the result by the number of days the funds are borrowed.

Nov 26, 2024 at 04:52 pm

How to Calculate DigiFinex Leverage Fee

DigiFinex is a cryptocurrency exchange that offers leveraged trading. Leverage allows traders to borrow funds from the exchange to increase their trading positions. The leverage fee is the interest charged on the borrowed funds.

Steps to Calculate DigiFinex Leverage Fee:

1. Determine the Loan Amount:
   The loan amount is the amount of funds borrowed from the exchange. This amount is typically expressed in the base currency of the trading pair (e.g., BTC, ETH).
2. Identify the Leverage Ratio:
   The leverage ratio is the ratio of the total position value to the loan amount. For example, a 10x leverage ratio means that the trader has borrowed 10 times the loan amount.
3. Calculate the Annual Interest Rate:
   The annual interest rate on DigiFinex leveraged trading is typically variable and can change based on market conditions. The current interest rate can be found on the DigiFinex website or trading platform.
4. Convert the Annual Interest Rate to a Daily Rate:
   The annual interest rate is typically expressed as a percentage per year. To calculate the daily interest rate, divide the annual interest rate by 365 (days in a year).
5. Calculate the Leverage Fee per Day:
   The leverage fee per day is equal to the loan amount multiplied by the daily interest rate. This amount represents the cost of borrowing the funds for one day.
6. Calculate the Leverage Fee for the Trading Period:
   The leverage fee for the trading period is equal to the leverage fee per day multiplied by the number of days the funds are borrowed. This amount represents the total cost of borrowing the funds for the entire trading period.

Example:

Suppose a trader borrows 1 BTC from DigiFinex to trade a BTC/USDT pair. The leverage ratio is 10x, the annual interest rate is 5%, and the trading period is 10 days.

1. Loan amount = 1 BTC
2. Leverage ratio = 10x
3. Annual interest rate = 5%
4. Daily interest rate = 5% / 365 = 0.0137%
5. Leverage fee per day = 1 BTC * 0.0137% = 0.000137 BTC
6. Leverage fee for the trading period = 0.000137 BTC * 10 days = 0.00137 BTC

Additional Considerations:

• The leverage fee is typically charged on a continuous basis, regardless of whether the trader has an open trade.
• The leverage fee can fluctuate based on market conditions and the amount of leverage used.
• Traders should carefully consider the potential risks and rewards of leveraged trading before borrowing funds.