# Simple Limit Orders

# Basic Margin Formula

Initial margin is calculated as a percentage of the notional value of the position that the order would generate, if executed. The calculation varies between linear and inverse futures.

# Linear Futures

For linear futures (e.g., BTC-USD-PERP where USD is the margin currency):

Initial Margin = Position Size × Limit Price × Initial Margin Rate

# Example

Given:

Order: Buy 1 BTC at $50,000
Initial Margin Rate: 1%
Limit Price: $50,000

Initial Margin = 1 BTC × $50,000 × 0.01 = $500 USD

# Inverse Futures

For inverse futures (e.g., BTC-USDT-INVERSE where BTC is the margin currency):

Initial Margin = (Position Size / Limit Price) × Initial Margin Rate

# Example

Given:

Order: Sell 100,000 USDT at $50,000/BTC
Initial Margin Rate: 1%
Limit Price: $50,000

Initial Margin = (100,000 / 50,000) × 0.01 = 0.02 BTC

# Execution Price Calculation

# Aggressing Orders

The margin system optimizes capital efficiency by calculating margin based on actual execution prices taking into account the price parameters provided on the order.

# Example

Consider the following order book for BTC-USD-PERP:

Asks:
50,200 - 2.5 BTC
50,100 - 3.0 BTC
50,000 - 2.0 BTC

Bids:
49,900 - 1.5 BTC
49,800 - 2.0 BTC
49,700 - 1.0 BTC

For a market buy order of 4 BTC:

2.0 BTC executes at $50,000
2.0 BTC executes at $50,100

The margin calculation uses these actual execution prices:

Initial Margin = (2.0 × $50,000 × 0.01) + (2.0 × $50,100 × 0.01)
                = $1,000 + $1,002
                = $2,002 USD

# Hidden Order Handling

When calculating the effective price of an aggressing order, the margin system ignores:

All resting hidden orders
Hidden portions of iceberg orders

This ensures the margin calculation does not leak information about hidden or iceberg orders when sending order rejections.

# Net Margin Calculation

The system calculates margin requirements separately for each side (buy/sell) and uses the higher value, considering the specific price of each order.

# Example

Consider an account with:

Buy Orders:
- 0.5 BTC @ $49,800
- 0.5 BTC @ $49,500
Sell Orders:
- 1.5 BTC @ $50,200
- 1.0 BTC @ $50,500
Initial Margin Rate: 1%

Buy Side Margin:
  Order 1: 0.5 × $49,800 × 0.01 = $249
  Order 2: 0.5 × $49,500 × 0.01 = $247.50
  Total Buy Side = $496.50 USD

Sell Side Margin:
  Order 1: 1.5 × $50,200 × 0.01 = $753
  Order 2: 1.0 × $50,500 × 0.01 = $505
  Total Sell Side = $1,258 USD

Required Initial Margin = max($496.50, $1,258) = $1,258 USD

# Cross-Margin

The Nekuti Matching Engine implements cross-margin across all instruments sharing the same margin currency.

# Example

Consider an account trading multiple instruments with USD margin:

BTC-USD-PERP position requiring $1,500 margin
ETH-USD-PERP position requiring $800 margin
SOL-USD-PERP position requiring $400 margin

Total Required Initial Margin = $1,500 + $800 + $400 = $2,700 USD

# Margin Rejection Response

When an order fails the initial margin check, the system returns a rejection response that includes the additional margin required to place the order. This helps users understand exactly how much additional collateral they need to deposit or free up to execute their desired trade.

# Calculation Example

Consider an account trading BTC-USD-PERP:

Available Balance: $800 USD
Existing Position Margin: $500 USD
New Order Requirements: $500 USD
Total Required: $1,000 USD

# Rejection Response Format

{
  "error": "Account has insufficient Available Balance, 500000000 USDt required"
}

Important notes:

All instruments using the same margin currency draw from the same margin balance
Each instrument's margin requirement is calculated independently and then summed