If you've started exploring perpetual contract trading, you've likely encountered terms like "current equity," "available balance," and "margin held." These concepts form the foundation of managing a USDT-based contract account. In this guide, we break down these terms clearly and logically, helping you navigate your account with confidence.
What Is a USDT Perpetual Contract Account?
A USDT perpetual contract account is a dedicated trading account where all positions, margins, and profits/losses are denominated in Tether (USDT). This simplifies the trading experience, as you don’t need to manage multiple cryptocurrencies as collateral. Instead, you trade with USDT as your base currency, making it easier to calculate gains, losses, and risks.
When you open your account, you’ll typically see several key metrics. Understanding these will help you make informed decisions and manage your risk effectively.
Breaking Down Your Account Equity
Your total account value, often referred to as Current Equity or Account Balance, represents the sum of all your assets in the USDT contract account. It consists of three main components:
- Available Balance
- Margin Held (Occupied Margin)
- Frozen Margin
Let’s examine each of these in detail.
Available Balance
Your Available Balance is the amount of USDT you can immediately use to open new positions or add to existing ones. Think of it as your "ready ammunition" for trading. If you spot a potential opportunity but lack sufficient available balance, you may miss out—so it’s essential to monitor this closely.
A unique feature of USDT perpetual contracts is that unrealized profit (also known as floating profit) is included in your available balance. This means you can use unrealized gains to open additional positions, a functionality not offered on all exchanges. Unrealized losses, however, reduce your available balance.
It’s worth noting that other contract types (like inverse contracts) may handle unrealized profits differently—often excluding them from available funds.
Margin Held (Occupied Margin)
Margin Held refers to the amount of USDT currently locked as collateral for your open positions. For traders holding positions in one direction (e.g., only long or only short), this is simply the margin required to maintain those positions.
If you hold both long and short positions in the same asset, the exchange will typically use the larger-side margin method. For example, if you have 100 BTC long contracts and 50 BTC short contracts, your margin held will be based on the 100-contract side. This approach improves capital efficiency.
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Frozen Margin
Frozen Margin is the amount reserved when you place a pending order. Until the order is filled or canceled, this margin is temporarily unavailable. Once the order is executed or revoked, the frozen margin is released back to your available balance.
Note that frozen margin operates differently from margin held. Even in dual-position scenarios, frozen margin is applied to both sides of the pending order.
Key Metrics for Risk Management
Beyond the core components, two metrics are particularly useful for evaluating your account health:
Account Leverage
Account Leverage is the ratio of your total position value to your current equity. For example:
- Position Value: $10,000
- Current Equity: $2,000
- Account Leverage = 5x
Higher leverage can amplify gains but also increases risk. While leverage is a useful indicator, it shouldn’t be your only risk metric.
Margin Usage Ratio
Margin Usage Ratio is the percentage of your current equity that is being used as margin (including both held and frozen margin). For instance:
- Margin Held: $100
- Frozen Margin: $100
- Current Equity: $2,000
- Margin Usage = ($100 + $100) / $2,000 = 10%
A higher usage ratio means more of your capital is actively deployed. While this can boost returns, it also reduces flexibility and increases liquidation risk.
Frequently Asked Questions
What is current equity in a USDT contract account?
Current equity is your total account value, including available USDT, margin held for open positions, and any frozen funds from pending orders. It represents your net worth in the contract account.
Can I use unrealized profits to open new positions?
Yes, in USDT perpetual contracts, unrealized profits are included in your available balance and can be used to enter new trades. This is a distinctive advantage of USDT-margined contracts.
How is margin calculated when I have both long and short positions?
Exchanges typically use the larger-side method. If your long position requires more margin than your short, only the long-side margin is counted as “margin held.” This optimizes capital usage.
What happens if my margin usage gets too high?
High margin usage increases liquidation risk. Most platforms provide a “risk level” indicator (0–100%). If it reaches 100%, your positions may be liquidated. Always monitor this metric.
Is frozen margin the same as margin held?
No. Frozen margin is temporarily reserved for pending orders, while margin held is actively used to maintain open positions. Frozen margin is released if orders are canceled or filled.
Why is USDT used as the base currency in these contracts?
USDT offers price stability compared to volatile cryptocurrencies. This makes it easier to calculate profits, losses, and margins without exchange rate complexity.
Summary
Understanding your USDT perpetual contract account is the first step toward becoming a proficient trader. Your current equity is your total capital, the available balance is your usable funds, margin held is your deployed collateral, and frozen margin is reserved for pending orders.
By monitoring metrics like account leverage and margin usage, you can better manage risk and capitalize on opportunities. Whether you're a beginner or an experienced trader, knowing how your account works is essential for long-term success.
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Remember, trading involves significant risk. Always educate yourself, start with small positions, and never invest more than you can afford to lose.