Unlock new possibilities in Futures trading with our enhanced Margin Risk formula

In the rapidly changing world of crypto, staying at the forefront demands relentless innovation. We are committed to continually refining our offerings to deliver exceptional value to traders consistently.

Building on this dedication, exciting developments are on the horizon with a significant upgrade to our Futures trading product. Starting March 26, 2025, we are introducing an enhanced method for calculating Margin Risk, paving the way for many new opportunities.

This change allows for: greater maximum position values for BTC and ETH, new leverage options up to 100x, and extended position life. The improvements are designed to aid traders by granting them the flexibility they need to excel in a competitive market.

Below is an overview of the enhancements and specific information for managing open positions.

Increased maximum leverage and position values

Starting March 26, 2025, we are adding two additional leverage levels (75x and 100x) for the BTC and ETH perpetual contracts, denominated and settled in USDT.

This increase in leverage opens the door for more substantial positions with less collateral, allowing you to amplify the purchasing power of your digital assets more effectively. Below, we provide an example to demonstrate the impact of this increased leverage.

Example: Currently, the maximum leverage is 50x, meaning that if you have 200 USDT in collateral, you can open a BTCUSDT position valued at 10,000 USDT. With the upcoming changes, leverage will increase to 100x, allowing you to raise the value of your position to 20,000 USDT.

Note: While higher leverage settings can significantly magnify the value of your positions, they also increase the potential for both profits and losses. For risk-free practice, we offer a simulated trading environment on the Nexo App, allowing you to hone your trading skills without financial risk.

We are also raising the maximum position value for BTCUSDT and ETHUSDT on March 26, 2025, to align with the new leverage capabilities. Below is a breakdown.

Tip: The position value is evaluated by multiplying the leverage by the value of your collateral in the Futures Wallet. For example, to open a position value worth 600,000 USDT with 10x leverage, you need to have 60,000 USDT collateral.

Extended position life

Starting March 26, 2025, we are raising the Margin Risk threshold required to trigger liquidation from 83.33% to 100.00%. This adjustment means that positions will remain active longer, allowing you to navigate market fluctuations more comfortably and capitalize on potential opportunities.

As illustrated above, the new Margin Risk calculation will adopt an exponential progression, growing slowly at first and accelerating after reaching a specific threshold dependent on factors such as the number of active positions and the Unrealized P&L.

In light of these changes, we advise you to trade responsibly, particularly when employing higher leverage settings.

What is Margin Risk?

Recall that Margin Risk is a percentage reflecting the relationship between the value of the collateral in your Futures Wallet and your open futures positions, both measured in USDT. A lower Margin Risk indicates a healthier state for your active positions.

When you open a position, you will see an initial Margin Risk rate (e.g., 15.30%). This rate will later increase if your positions generate a negative Unrealized P&L and decrease if your positions are profitable.

All active positions are automatically closed when the Margin Risk liquidation threshold is reached or exceeded. This emphasizes the importance of monitoring your positions, especially when using higher leverage, to effectively navigate the volatile crypto market.

Diving into the new Margin Risk calculations

Effective March 26, 2025, as part of the new Margin Risk formula, we are introducing a new parameter known as Maintenance Margin, which will be used along with the Equity in your Futures Wallet to calculate the Margin Risk.

Formula: Margin Risk = Maintenance Margin / Equity

Key considerations:

The Maintenance Margin represents the minimum Equity you must maintain in your Futures Wallet to keep your position open and avoid liquidation. This crucial value will be displayed on the platform interface, as shown above.
On the other hand, Equity is calculated as the USDT in your Futures Wallet plus the Unrealized profits or losses on any open positions. If you have 100,000 USDT in the Futures Wallet and your open position has generated 30,000 USDT profit, then the Equity will be 130,000 USDT.

Example: Let's say you have an open Long position for 1 BTCUSDT. Your total equity stands at 20,000 USDT, while the system has assessed the required Maintenance Margin to be 2,000 USDT. In this scenario, the calculation of your Margin Risk would be:

Step 1: Margin Risk = Maintenance Margin / Equity
Step 2: Margin Risk = 2,000 / 20,000
Result: Margin Risk = 10.00%

Note:

Understanding and monitoring your Maintenance Margin and Equity can help you better manage your exposure to the market.
All active positions are factored into the Maintenance Margin, which will be displayed on the platform interface.

New Margin Call thresholds

We are also introducing new Margin Call thresholds on March 26, 2025.

Initial notification: If your active positions begin to accumulate negative Unrealized PnL, pushing your Margin Risk to 65%, we may send a push notification. This alert prompts you to either increase the collateral in your Futures Wallet or close some positions to manage risk.

Further alerts: Should your Margin Risk exceed 85%, an email notification may be sent as an additional reminder to take action.

Note: These notifications are for informational purposes only. It is the client's responsibility to monitor and manage their Futures Wallet balance and take necessary actions.

How will the changes impact active positions?

The upcoming enhancements scheduled for March 26, 2025, will also affect positions opened before this date. Here’s how these changes will unfold:

Recalculation of Margin Risk: The Margin Risk for existing positions will be recalculated using the new formula. The specific change in Margin Risk percentage will depend on various factors, including the number of active positions you have and their Unrealized PnL.
Modified liquidation threshold: Liquidations will now be triggered at a 100.00% Margin Risk (previously 83.33%). This adjustment means that the liquidation price for each position will be further away from its current market price.
Display of Maintenance Margin: The platform interface will show the total Maintenance Margin for all active positions. This value includes the sum of the individual Maintenance Margin values of each position, allowing you to better manage your trading risks.
Increased leverage and position values: The enhancements include increased maximum leverage and position values. Depending on the specific contract you are trading, you may have the option to either increase your position size or leverage, offering greater flexibility in how you trade.

These changes allow you to adjust the parameters of your active positions in line with your trading and risk management strategies once the updates are implemented.

Trading Futures on the Nexo platform is unavailable for clients residing in the USA, Canada, Australia, the United Kingdom, and some countries in the EEA. The content and examples presented in this article are for informational and educational purposes only and include no warranties. They should not be interpreted as financial advice or a recommendation to buy specific assets. Please note that digital assets are volatile, and the value of your investment can fluctuate based on market conditions. We advise you to trade responsibly. Although we may take reasonable steps to notify you of any changes in the Margin Risk, Nexo reserves the right to liquidate your collateral or close your Futures Contracts without prior notice, especially when market conditions require immediate action.