Futures Trading

Leverage and Margin

Last updated: 12/31/2025

1. Leverage and Margin

In futures trading, leverage is a tool that increases capital efficiency. By using leverage, traders can open positions with a relatively small amount of capital while controlling contracts with a much larger notional value, thereby amplifying potential profits. At the same time, risks are amplified proportionally.
Margin is the amount of funds that users must lock up to fulfill their contractual obligations. It serves as financial collateral. As long as sufficient margin is available in the account, users can open positions of a corresponding size without paying the full notional value of the contract upfront.
Leverage and margin have an inverse relationship:
  • Higher leverage → lower required margin ratio
  • Lower leverage → higher required margin ratio
The core relationship can be summarized as:
Initial Margin Ratio = 1 / Leverage
For example, with 10× leverage, only 1/10 of the contract’s notional value is theoretically required as margin to open a position.
In actual trading, opening fees are also included in the total cost at the time of order placement. Therefore, the order cost shown to users is not just the margin, but also includes the estimated trading fees.

 

2. Order Cost (Isolated Margin)

The funds occupied when placing an order are referred to as the order cost, calculated as:
Order Cost = Order Margin + Estimated Opening Fee
Depending on the contract type, the calculation method differs slightly. Futures contracts can be divided into linear contracts and inverse contracts.

2.1 Linear Contracts

USDT-margined contract margin calculation:
  • Order Cost = Estimated Price × |Order Quantity × Contract Multiplier| × (1 / Leverage + Taker Fee Rate)
Example
Item Calculation
BTCUSDT Perpetual Contract
Estimated Price: 50,000 USDT
Order Quantity: 1 contract
Contract Multiplier: 0.001 BTC
Leverage: 10×
Taker Fee Rate: 0.06% (0.0006)		 Value = 50,000 × (1 × 0.001) = 50 USDT
Margin Portion = 50 × (1 / 10) = 5 USDT
Fee Portion = 50 × 0.0006 = 0.03 USDT
Order Cost = 5 + 0.03 = 5.03 USDT

This means the user only needs approximately 5.03 USDT to open a position with a notional value of 50 USDT.

2.2 Inverse Contracts (Coin-Margined, etc.)

Coin-margined contract margin calculation:
  • Order Cost = |Order Quantity × Contract Multiplier| ÷ Estimated Price × (1 / Leverage + Taker Fee Rate)
Note: The final margin is denominated in the underlying asset (e.g., BTC).
Example 
Item Calculation
BTCUSD Coin-Margined Perpetual Contract
Estimated Price: 50,000 USD
Order Quantity: 100 contracts
Contract Multiplier: 100 USD
Leverage: 10×
Taker Fee Rate: 0.06% (0.0006)		 Value = (100 × 100) ÷ 50,000 = 0.2 BTC
Margin Portion = 0.2 × (1 / 10) = 0.02 BTC
Fee Portion = 0.2 × 0.0006 = 0.00012 BTC
Order Cost = 0.02 + 0.00012 = 0.02012 BTC

 

3. Margin Ratio

The cross margin ratio is used to monitor the overall risk of the account. When the risk reaches a certain threshold, forced liquidation will be triggered to protect account safety.
Cross Margin Ratio = (Maintenance Margin of Open Positions + Estimated Liquidation Fee) / (Total Cross Margin − Estimated Opening Fees)

 

4. Adding Margin

Adding margin is only available under isolated margin mode. Users may increase the margin of a specific position to manage risk independently.

 

5. Leverage Adjustment

KuCoin Futures allows users to adjust leverage for existing positions under cross margin mode.
Under isolated margin mode, leverage reflects the actual leverage of the current position and cannot be adjusted directly. Users may influence actual leverage by:
  • Adding or reducing isolated margin
  • Increasing or decreasing position size