Why Does Position Margin Change in Perpetual Contracts Without Reducing Position Size?
Many users of perpetual contracts may wonder: "Why does my position margin decrease or sometimes increase when I haven’t reduced or added to my position?"
This is a normal feature of perpetual contracts and is primarily caused by the following two factors working together:
Funding fee mechanism
Market price fluctuations (mainly applicable in cross margin mode)
I. Explanation of the Funding Fee Mechanism
Perpetual contracts do not have an expiration or delivery date. To keep the contract price anchored to the spot price over the long term, NewCoin perpetual contracts employ a funding fee mechanism.
1. Funding Fee Settlement Time Funding fees are settled every 8 hours, at the following times:
08:00
16:00
24:00 (All times are in HKT)
Only users holding a position at the moment of funding fee settlement will pay or receive funding fees. If a position is closed before settlement, no funding fee will be incurred.
2. How Funding Fees Are Calculated Funding Fee = Position Value × Current Funding Rate
When the funding rate is positive: 👉 Long positions pay funding fees to short positions
When the funding rate is negative: 👉 Short positions pay funding fees to long positions
Therefore: Every user holding a perpetual contract position may either pay or receive funding fees.
It is important to note that the actual funding fee a user receives depends on the total amount successfully deducted by the system from the counterparty’s account.
3. Impact on Position Margin When the account’s available balance is insufficient to cover the funding fee:
The system will deduct the funding fee from the position margin,
Causing the position margin to decrease,
While the liquidation price moves closer to the mark price, increasing risk.
Conversely, if the user is a receiver of funding fees, the position margin may increase accordingly.
II. Impact of Price Fluctuations on Position Margin (Cross Margin Mode)
In cross margin mode, the position margin is not a fixed value but adjusts dynamically with changes in market prices.
Margin usage calculation in cross margin mode: Position Margin Used = Contract Face Value × Number of Contracts × Latest Mark Price ÷ Leverage
Therefore:
When the mark price rises, position margin used may increase.
When the mark price falls, position margin used may decrease.
In this scenario, even without reducing the position size, the margin can fluctuate.
By comparison, the impact of funding fees on margin is generally smaller in cross margin mode.
III. Important Notes on Funding Fees
NewCoin does not charge users any funding fees.
All funding fees are exchanges between users.
The platform only provides the calculation and settlement mechanism for funding fees and does not take any portion of these fees.
IV. Summary
Changes in position margin without reducing the position size are a normal occurrence in perpetual contracts, primarily due to:
✔ Funding fee settlements leading to margin deductions or additions. ✔ Dynamic adjustments in margin usage due to mark price fluctuations in cross margin mode.
Recommendations for users:
Regularly monitor the funding rate.
Maintain a reasonable available balance.
Avoid triggering liquidation risk due to insufficient margin caused by funding fees or price fluctuations.
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