How to Calculate Order Cost for Perpetuals and Futures Trading

When you’re about to execute a trade in perpetuals or futures markets, understanding order cost is critical. The order cost represents the total capital you need to reserve when placing a trade, and it’s visible right before you confirm your order. This amount is shaped by several variables including position size, leverage multiplier, and applicable fees. Let’s break down what actually goes into this calculation and why it matters for your trading strategy.

What Determines Your Order Cost

Your order cost isn’t a single number—it’s the sum of three distinct components working together. First, you need initial margin: the collateral required to open your position. Second comes the entry fee: what you pay when opening the trade. Third is the exit fee: the cost when closing the position. Understanding how each component contributes helps you plan your capital more effectively.

Think of it this way: when you’re planning to trade 1 BTC with 10x leverage, the system reserves enough capital to cover not just your opening position but also the projected closing cost. This prevents surprises when your trade winds down.

Breaking Down the Order Cost Formula

The calculation method differs slightly depending on your contract type, but the concept stays consistent: initial margin + opening fee + closing fee.

For USDT and USDC-Settled Contracts:

The math is straightforward because everything is priced in a stablecoin:

• Initial Margin = (Contract Quantity × Order Price) / Leverage
• Fee to Open = Contract Quantity × Order Price × Taker Fee Rate
• Fee to Close (Buy Orders) = Contract Quantity × Order Price × [1 − (1 / Leverage)] × Taker Fee Rate
• Fee to Close (Sell Orders) = Contract Quantity × Order Price × [1 + (1 / Leverage)] × Taker Fee Rate

For Inverse Contracts (BTC, ETH-Settled):

Inverse contracts work backward—you’re buying or selling contracts denominated in the crypto itself rather than a stablecoin:

• Initial Margin = (Contract Quantity / Order Price) / Leverage
• Fee to Open = (Contract Quantity / Order Price) × Taker Fee Rate
• Fee to Close (Buy Orders) = (Contract Quantity / Order Price) × [1 + (1 / Leverage)] × Taker Fee Rate
• Fee to Close (Sell Orders) = (Contract Quantity / Order Price) × [1 − (1 / Leverage)] × Taker Fee Rate

Important: These formulas calculate the order cost reserved at placement time. Your actual fees might vary based on your order execution type, the real entry/exit price you achieve, and your VIP trading tier.

Contract Type Impact on Order Cost Calculation

Different settlement currencies work differently, and this affects your funding flow:

USDT and USDC Contracts: Your order cost is denominated in the settlement currency (USDT or USDC respectively). This makes budgeting simple since everything’s in stablecoin terms.

Inverse Contracts (like BTCUSD or ETHUSD): Your costs are denominated in the underlying asset—BTC, ETH, or whichever coin settles the contract. The fee to open and close must be paid in that crypto when the orders execute.

Special Case - Unified Trading Accounts (UTAs): Here’s where it gets flexible. If you’re using a UTA, you can hold different collateral types, meaning you can cover initial margin with various assets. However, the opening and closing fees still must be settled in the contract’s native settlement asset when your order executes. If your balance in that asset falls short, the system automatically borrows what you need to cover the fees—this is called auto borrowing.

Real-World Order Cost Examples

Let’s walk through concrete scenarios so the formulas make sense.

Example 1: Long BTCUSDT Position

Trader A decides to open a long position: 1 BTC of BTCUSDT at 50,000 USDT, using 10x leverage. They’re placing a market order with a 0.055% taker fee rate.

Here’s the breakdown:

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

This means Trader A needs 5,052.25 USDT reserved to execute this order.

Example 2: Long ETHUSD Position (Inverse Contract)

Trader B is opening a long position: 10,000 USD worth of ETHUSD at 2,000 USDT per ETH, using 25x leverage. Market order, 0.055% taker fee.

The calculation is different because it’s an inverse contract:

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

Trader B needs 0.20561 ETH reserved—notice the cost is expressed in ETH, not USDT.

Three Ways to Place Orders and Calculate Costs

The platform supports three different order entry methods, each with its own approach to the order cost:

1. Order by Quantity (Default Method)

You input how many contracts you want to buy or sell. The system calculates the order cost from there. For inverse contracts, the quantity is in USD (1 contract = 1 USD value). For USDT/USDC contracts, quantity is in the underlying token (like MNT for MNTUSDT).

2. Order by Cost (Hedge Mode Only)

Instead of specifying quantity, you input your desired total cost. The platform reverse-calculates the quantity needed. The result must meet minimum order size requirements. This is convenient when you have a fixed capital allocation and want to know how many contracts that buys.

3. Order by Value (Position Value)

You specify the position value you want to open. For inverse contracts, this is expressed in the settlement coin (ETHUSD value in ETH). For USDT/USDC contracts, it’s in USDT or USDC. Again, the system reverse-calculates quantity, which must meet minimums.

Key Takeaway: Why Order Cost Matters

Understanding order cost prevents capital surprises. You know exactly how much money gets tied up before confirming the trade. Whether you’re calculating costs for a small position or scaling up leverage, these principles remain consistent. By mastering the formula for your contract type and reviewing the examples above, you’ll trade with confidence, knowing precisely what’s at stake.