What is Order Cost?
Order cost refers to the total funds required to place an order. Traders can view the order cost at any time through the order placement or confirmation window. This cost is influenced by factors such as position value, leverage, and fees. It includes the initial margin needed to open a position, along with opening and closing fees.
Order Cost for Different Contract Types
- USDT and USDC Contracts: For contracts settled in USDT or USDC, the order cost is paid in USDT or USDC, respectively.
- Inverse Contracts: These are settled in the corresponding cryptocurrency. For example, BTCUSD or ETHUSD inverse contracts require order costs to be paid in BTC or ETH, respectively.
In a Unified Trading Account (UTA), users can utilize other collateral assets as part of their margin balance. This allows traders to place orders without necessarily holding the specific settlement asset to cover the initial margin. However, opening and closing fees must still be paid in the settlement asset at the time the order is executed. If there is a shortage of the settlement asset, an automatic borrowing process will be triggered.
How to Calculate Order Cost
For USDT and USDC Contracts
Order Cost = Initial Margin + Opening Fee + Closing Fee
- Initial Margin = (Contract Quantity × Order Price) / Leverage
- Opening Fee = Contract Quantity × Order Price × Taker Fee Rate
- Closing Fee (Buy Order) = Contract Quantity × Order Price × [1 - 1/Leverage] × Taker Fee Rate
- Closing Fee (Sell Order) = Contract Quantity × Order Price × [1 + 1/Leverage] × Taker Fee Rate
For Inverse Contracts
Order Cost = Initial Margin + Opening Fee + Closing Fee
- Initial Margin = (Contract Quantity / Order Price) / Leverage
- Opening Fee = (Contract Quantity / Order Price) × Taker Fee Rate
- Closing Fee (Buy Order) = (Contract Quantity / Order Price) × [1 + 1/Leverage] × Taker Fee Rate
- Closing Fee (Sell Order) = (Contract Quantity / Order Price) × [1 - 1/Leverage] × Taker Fee Rate
Note:
The formulas above are used to calculate the order cost that will be occupied when placing an order. However, the actual opening and closing fees may vary based on order type, the actual opening or closing price, and the user's fee rate tier.
Order Cost Calculation Examples
Example for USDT/USDC Contracts
Trader A uses 10x leverage to open a 1 BTC long position on BTCUSDT at a price of 50,000 USDT. Assume a market order is used with a Taker fee rate of 0.055%.
The order cost is calculated as follows:
- Initial Margin = (50,000 × 1) / 10 = 5,000 USDT
- Opening Fee = 1 × 50,000 × 0.055% = 27.5 USDT
- Closing Fee = 1 × 50,000 × [1 - (1/10)] × 0.055% = 24.75 USDT
Total Order Cost = 5,000 + 27.5 + 24.75 = 5,052.25 USDT
Example for Inverse Contracts
Trader B uses 25x leverage to open a 10,000 USD long position on ETHUSD at a price of 2,000 USDT. Assume a market order is used with a Taker fee rate of 0.055%.
- Initial Margin = (10,000 / 2,000) / 25 = 0.2 ETH
- Opening Fee = (10,000 / 2,000) × 0.055% = 0.00275 ETH
- Closing Fee = (10,000 / 2,000) × [1 + (1 / 25)] × 0.055% = 0.00286 ETH
Total Order Cost = 0.2 + 0.00275 + 0.00286 = 0.20561 ETH
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Order Placement Methods
There are three primary methods for placing orders:
By Quantity
This is the default order placement method. You input the number of contracts you wish to buy or sell. For inverse contracts, the quantity is denoted in USD (e.g., 1 contract = 1 USD). For USDT and USDC contracts, the quantity is denoted in the underlying asset (e.g., MNTUSDT contracts are in MNT).
By Cost
You input the total cost you intend to spend, and the system will calculate the corresponding contract quantity for the order. The derived order quantity/value must meet the minimum order quantity/value requirements. Note that this option is only available in dual-position mode.
By Position Value
You input the value of the position you wish to open. For inverse contracts, the value is in the corresponding crypto (e.g., ETHUSD position value is in ETH). For USDT and USDC contracts, the value is in USDT or USDC, respectively. The system will calculate the required contract quantity, which must meet the minimum order quantity/value requirements.
Frequently Asked Questions
What is the difference between initial margin and order cost?
The initial margin is the collateral required to open a leveraged position. Order cost is the total amount needed to place the order, which includes the initial margin plus estimated opening and closing fees. It represents the maximum potential immediate deduction from your available balance.
Why am I charged a closing fee when I open a position?
The closing fee is an estimated cost displayed upfront to give you a complete picture of the total funds required for the entire trade cycle. This ensures you have sufficient balance not just to open, but also to potentially close the position. The actual closing fee may differ when you eventually close the trade.
Can my order cost change after I place the order?
The initial margin is locked in at order placement. However, the actual fees paid upon execution can vary slightly if the order is filled at a different average price than expected or if a different fee rate (Maker vs. Taker) applies.
What happens if I don't have enough of the settlement asset for fees?
If your account lacks the specific settlement asset (e.g., BTC for an inverse contract) needed to pay the fees, the platform's auto-borrow system may kick in to loan you the required amount, subject to interest charges. It's more efficient to ensure you hold the necessary asset.
How does leverage affect my order cost?
Higher leverage reduces the amount of initial margin required to open a position, which decreases that component of the order cost. However, it can increase the estimated closing fee component in the formulas, as seen in the calculation examples.
Is the 'By Cost' order method better than 'By Quantity'?
The "By Cost" method is useful for risk management as it allows you to define the exact amount of capital you want to allocate to a trade. The system then calculates the maximum position size possible with that amount. It's particularly helpful for traders who wish to strictly define their risk per trade. 👉 Get advanced position sizing methods