# Glossary

## Introduction

This glossary explains the various terms related to derivative trading that are used throughout Demex.

Please also check the [Market Specifications](https://guide.dem.exchange/trade/futures/market-specifications) descriptions of terms related to market parameters (which can be found in the Market Details panel).

#### **Funding Rate**

Funding rate is a mechanism to keep the price of perpetual contracts as close to the index price as possible.

When the funding rate is **negative**, **short** positions **pay long** positions, and when the funding rate is **positive**, **long** positions **pay short** positions. 

Learn more about our funding rate [here](https://guide.dem.exchange/trade/fees/funding-fees).

#### **Funding Amount**

The funding amount refers to the payment amount exchanged between long and short positions in perpetual contracts.

`Funding Amount = Position size * Funding Rate`

`There are no fees applied on the Funding Amount.`

#### **Wallet Balance** 

Wallet balance refers to the total amount of funds available in a user's wallet.

#### **Unrealized Profit and Loss** 

The unrealized profit and loss (uPnL) refers to the potential profit or loss on an open position that has not been realized through closing the position.

For long positions, this is:

`[(1/Entry Price) - (1/Mark Price)] * Position Size`

For short positions, this is:

`[(1/Mark Price) - (1/Entry Price)] * Position Size`

#### **Position Margin** 

Position margin refers to the value of collateral that is backing an open position.

#### **Order Margin** 

Order margin refers to the margin required to place an order.

#### **Margin Balance** 

Margin balance represents the funds in your wallet that are available for you to use when placing new orders.

Your margin balance is given by:

`Wallet Balance - Position Margin - Order Margin`​

#### **Liquidation Fees**

Liquidation fees refer to the fees imposed when a position is forcibly closed due to having insufficient maintenance margin. There are **no liquidation fees** on Demex.

When a liquidation occurs, any remaining margin is sent to the [Insurance Fund](https://guide.dem.exchange/trade/liquidation-engine#insurance-fund). 

Learn more about how liquidation works [here](https://guide.dem.exchange/trade/futures/liquidation-engine).