How is the fee for keeping a position open calculated?

The fee for keeping a position open depends on the current situation on the swaps market. Because funds used to open positions are drawn from a pool of funds originating from open swaps, the fee charged for maintaining these positions depends on the current rates of interest on these contracts offered on the market.

For example, if the following swaps are open on the swaps market:

  • 1 BTC at 5% per year,
  • 2 BTC at 10% per year,
  • 3 BTC at 15% per year,

and the following positions traded on margin are opened:

  • Long positions for the total of 1.5 BTC,
  • Short positions for the total of 1 BTC,

then the fee for keeping the positions open will be calculated as follows:

  • The swap for 1 BTC at 5% per year will be allocated evenly to maintain short and long positions (0.5 BTC each).
  • Out of the swap for 2 BTC at 10% per year, the amount of 1 BTC will be allocated evenly to maintain short and long positions (0.5 BTC each) and further 0.5 BTC – to maintain the remaining long positions. The balance of the swap, i.e. 0.5 BTC, will be unused.
  • The swap for 3 BTC will be unused.

This means that 0.5 BTC at 5% per year and 0.5 BTC at 10% per year will be used to maintain short positions. Consequently, the average fee for keeping such positions open will be 7.5% per year plus 20% commission charged by the exchange, i.e. 9% per year, or 0.0176% per day.

Meanwhile, 0.5 BTC at 5% per year and 1 BTC at 10% per year will be used to maintain long positions. Consequently, the average fee for keeping such positions open will be 8.33% per year plus 20% commission charged by the exchange, i.e. 10% per year, or 0.0190% per day.

Have more questions? Submit a request

0 Comments

Please sign in to leave a comment.
Powered by Zendesk