Initial margin and maintenance margin indicates if you have enough collateral to cover margin trading or avoid liquidity risk.
Before reading this article, please read through Collateral and Exposure.
Initial Margin
To open a margin position, the account needs to have enough collateral to cover the initial margin requirement of the trade.
The initial margin is adjusted exposure * IMR.
The IMR is the maximum of 1 / leverage and IMR factor * (adjusted exposure)
Example:
Let’s assume you are using x5 leverage, the BTC price is 10,000 $USDT and its IMR factor is 10-6.
| Balance |
Interest(USDT)
|
Pending order(BTC/USDT)
|
Total Exposure
(USDT) |
Pending Exposure
(USDT) |
Adjusted Exposure
(USDT) |
IMR
|
Initial Margin
|
|
| BTC | USDT | |||||||
| -200 | 100 | 5 | -50 | 2,000,000 | 500,000 | 2,500,000 | 0.215 | 537,500 |
| -150 | 100 | 5 | -50 | 1,500,000 | 500,000 | 2,000,000 | 0.2 | 400,000 |
| 100 | 5,100 | 5 | -50 | 0 | 0 | 0 | 0.2 | 0 |
| -100 | 5,100 | 5 | 50 | 1,000,000 | 0 | 1,000,000 | 0.2 | 200,000 |
| 0 | 5,100 | 5 | -1 | 0 | 10,000 | 10,000 | 0.2 | 2,000 |
| 0 | 5,100 | 5 | 0 | 0 | 0 | 0 | 0.2 | 0 |
| 1 | -5000 | 5 | 0 | 5,005 | 0 | 5,005 | 0.2 | 1,001 |
Maintenance Margin
The maintenance margin is the minimum collateral requirement an account needs to hold in order to avoid a liquidation event.
The maintenance margin is total exposure * MMR.
The MMR is the maximum of 10% and 0.5 * IMR factor * (total exposure).
Margin Ratio
The margin ratio is total collateral / total exposure.
Open Margin Ratio
Open margin ratio is adjusted collateral / adjusted exposure.