Maintenance Margin (MM) is the minimum amount of collateral required to keep your existing positions open.
Monitoring your Maintenance Margin is critical for risk management, as exceeding your limits directly triggers the liquidation process.
Key Definition
Your maintenance margin requirement represents the threshold below which your account value cannot fall.
If your Maintenance Margin Usage goes above 100%, your positions will be at risk of liquidation.
If your account value drops toward your maintenance margin level, consider adding more collateral or partially closing positions to reduce your Maintenance Margin usage and avoid liquidation.
Leverage & Maintenance Margin
Because the maintenance requirement is tied to the Initial Margin, decreasing your leverage effectively increases your Maintenance Margin requirement in dollar terms.
As a result, decreasing your leverage may move your estimated liquidation price closer to your current price, as your Maintenance Margin requirements are increasing.
The following examples illustrate the Maintenance Margin required for a position with a notional value of $100:
Leverage | Notional Position Value | Required Initial Margin | Maintenance Margin |
50x | $100 | $2 | $1 |
5x | $100 | $20 | $10 |
1x | $100 | $100 | $50 |
As shown, while a 50x position only requires $1.00 to remain open, a 1x position requires $50.00.
Monitor your account value to minimize liquidation risk. As Maintenance Margin fluctuates with the real-time movements of your positions, you must ensure it consistently stays above your total maintenance margin requirement to avoid liquidation.