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Margin Mechanism
Initial margin refers to the required amount of collateral to open a position, determined by the initial margin rate and the value of the order.
The maintenance margin refers to the minimum amount of collateral required to hold a position. The maintenance margin determines at what price your position will trigger forced liquidation.
Initial Margin (IM)
Initial margin = Initial margin rate * Order price * Order quantity. The actually reserved margin for the order includes additional taker trading fees on both sides; however, the actual trading fees will be paid when the order is executed and calculated based on the actual transaction price.
Maintenance Margin (MM)
Maintenance Margin (MM) is calculated based on the position's Maintenance Margin Rate (MMR), and the Maintenance Margin Rate for each position increases with the incremental increase of the margin tiers.
The Maintenance Margin Amount for each position = Maintenance Margin Rate (MMR) * Opening Position Value.
The transaction fees required for closing the position (Taker) are also included in the maintenance margin requirement for the position. This represents the minimum required collateral to maintain the position, and if the position's margin balance falls below this amount, the position will be forcibly liquidated.
Position margin under isolated margin mode
In isolated margin mode, it depicts the margin placed into a position is isolated from the trader's account balance. In the event of liquidation, the trader will only lose all of his position margin (excluding funding fees). Hence, the position margin under isolated margin mode is:
Position margin (isolated margin mode) = initial margin
Position margin under cross margin mode
When a trader is using cross margin mode, it uses all of a trader’s available balance within the corresponding trading pair coin type to prevent liquidation, hence the display of the position margin will be different from isolated margin as it will now occupy the available balance to cover the unrealized loss. Below shows the details on how position margin is occupied under cross margin mode.
- 1.One-way position mode:
Position Margin in cross-margin mode = Available Balance + Initial Margin
- 2.Fully hedged position:
For a fully hedged position under cross margin mode, the quantity for long and short position must be the same. Fully hedged positions will not be liquidated as the unrealized profit of one position will be used to support the unrealized loss of the opposite direction of position under the same trading pair.
Position margin (Long position) = 1.2 * Maintenance margin % * Position Value + fee to close - net unrealized loss
Position margin (Short position) = 1.2 * Maintenance margin % * Position Value + fee to close
- 3.Partially hedged position:
Position margin for position with lesser quantity= 1.2 * Maintenance margin % * Position Value + fee to close
Position margin for position with more quantity= 1.2 * Maintenance margin % * Position Value for fully hedged proportion + fee to close + initial margin of unhedged proportion + net unrealized loss of fully hedged proportion + unrealized loss of unhedged position
Last modified 5mo ago