How to use it
- Choose long or short, and enter the entry and exit prices.
- Enter the position size (notional, in CAD) and the leverage.
- Enter the trading fee per side and the funding rate as an APR.
- Enter the days held and the maintenance margin percentage.
- Read the net result, the return on margin and the approximate liquidation price.
Notional, margin and leverage
Position size here is notional: the full value of the exposure at entry. Margin is notional divided by leverage, the amount you actually post. A $10,000 position at 5× needs $2,000 of margin, and every 1% price move changes the result by about $100, which is 5% of the margin.
Trading fees are charged on notional, not on margin, both when opening and when closing. Funding is a periodic payment between longs and shorts that keeps a perpetual contract close to the spot price; when the rate is positive, longs pay shorts. The calculator expresses funding as an APR on entry notional, prorated by the days held.
Return on margin is the net result divided by the margin posted. It is the number that makes leverage look attractive in a gain and alarming in a loss, because fees and funding are charged on the full notional while the return is measured against the smaller margin.
Worked example
Illustrative inputs: entry $50,000, exit $55,000, $10,000 notional at 5×, a 0.05% fee per side, funding at 10% APR (longs pay), held for 30 days, 0.5% maintenance margin.
Funding cost the long more than 8% of its gross gain in a month. Had the price fallen to $45,000 instead, the long would have lost $1,091.69, or 54.58% of its margin, on a 10% price move.
| Item | Long | Short |
|---|---|---|
| Margin posted | $2,000.00 | $2,000.00 |
| Price profit or loss | +$1,000.00 | −$1,000.00 |
| Trading fees (entry and exit) | −$10.50 | −$10.50 |
| Funding over 30 days | −$82.19 | +$82.19 |
| Net profit or loss | +$907.31 | −$928.31 |
| Return on margin | +45.37% | −46.42% |
| Approximate liquidation price | $40,250 | $59,750 |
The liquidation price is an approximation
For an isolated-margin position, liquidation happens roughly when losses use up the margin down to the maintenance requirement. The calculator approximates this as entry × (1 − 1/leverage + maintenance margin) for a long and entry × (1 + 1/leverage − maintenance margin) for a short. At 5×, the illustrative long is liquidated after a fall of about 19.5%.
Real venues work from a mark price, use maintenance margins that rise with position size, and include accrued funding, fees and liquidation charges, so the actual trigger can be noticeably closer than this estimate. In fast markets, positions can be closed at worse prices than the trigger. See liquidation risk.
What the result leaves out
Funding rates on most venues reset every few hours and can change sign; the calculator holds the rate constant and applies it to entry notional. It ignores slippage on entry and exit, and the CAD/USD exchange rate if the position settles in a USD stablecoin. It also assumes the position survives until the exit date.
On decentralized venues, add smart contract risk and oracle risk: the price feed decides when liquidations happen.
Canadian context
Requirements placed on crypto trading platforms operating in Canada include a prohibition on offering margin, credit or other leverage to clients, and platforms located outside Canada that serve Canadians are expected to register here too. Before using any platform, check its registration with the Canadian Securities Administrators; see regulation.
For tax, CRA weighs factors such as how often you trade, short holding periods, your knowledge of the markets and financing with debt when deciding whether gains are business income or capital gains. Active leveraged trading may be more likely to be treated as business income; see capital vs business income.