What is margin?
The leverage in futures trading is facilitated through margin, which means you do not need to pay the full amount for the asset. Instead, you only need to invest a small amount of funds at a specified rate based on the futures value as collateral. This fund is known as Margin.
- Leverage greatly increases the utilization of funds, but high returns also come with high risks.
- The higher the leverage used by a trader, the lower the required margin.
Example:
Judy currently holds an EOS/USDT long position with 2x leverage and a current margin of 0.15314844 USDT. If she increases her leverage, the margin will be reduced accordingly, while if she reduces her leverage, the margin will be increased accordingly.
Initial margin
The margin required for opening a position is The minimum margin amount required to open a position., which is displayed as "Order cost" when placing an order.
Initial margin = (position value ÷ leverage) x (1 + price fluctuation factor) + estimated opening fee at the time of opening x (1 + transaction fee fluctuation factor)
The price fluctuation factor is a coefficient set to ensure that users can place orders for the required amount. If there is a surplus after deducting the actual opening fee when the order is fully executed, it will be automatically returned to the available assets.
Position margin
Once a position has been created, you can view the margin for the current position in the "Positions" section of the Trade > Futures screen.
Initial position margin = position value at entry price ÷ leverage
Once a position is opened, you can adjust its margin by using the "+/-" button or by adjusting the leverage.
Maintenance margin (MM)
Calculated based on the maintenance margin rate of the position. The maintenance margin ratio for each position increases as the margin tier increases.
Maintenance margin for each position = maintenance margin ratio × the value of the position at the current mark price. The trading fee (charged to the taker) required to close a position is also included in the position's maintenance margin. This represents the minimum margin required to maintain a position, and if the account balance falls below the maintenance margin, the position will be liquidated.