Margin is the collateral the platform requires to open and hold a position. It covers potential losses from adverse price movement and represents a portion of the position's notional.
Margin serves two purposes:
- it makes leveraged trading possible, letting you control a position larger than the capital posted;
- it acts as a buffer that stops losses from exceeding the funds available to the trader.
Initial margin ratio = 1 ÷ leverage
At x5 leverage the initial margin ratio is 20%: opening a position with a $5,000 notional requires $1,000 of collateral. How notional and position size are calculated is covered on the Positions and Leverage page.
Maintenance margin
The maintenance margin ratio sets the minimum level of margin at which a position can still stay open. As soon as margin falls below that threshold, liquidation begins. This ratio is what determines where the liquidation price sits.
Worked example
A trader opens a long with $10,000 of margin and a position notional of $200,000. The maintenance margin ratio is 1% of the notional, which is $2,000.
Liquidation occurs once only $2,000 of the margin is left — that is, at a loss of $8,000, or 80% of the margin posted. Measured against the notional, that is roughly a 4% move against the trader.
The buffer above the maintenance margin level is what stands between a position and forced closure. The smaller it is, the less price movement it takes to trigger liquidation.
Liquidation price
The liquidation price is the level at which the platform force-closes a position because the margin no longer covers the loss.
| What to know | Why it matters |
|---|---|
| Only the current position's margin is at risk | The rest of the funds on the balance are untouched by a liquidation |
| The liquidation price can be pushed away | The "Add margin" function increases the collateral and moves the threshold further off |
| A stop loss triggers before liquidation | The position closes at a level you chose rather than at the platform's threshold |
| The liquidation price is not static | Funding is charged from the margin every 8 hours regardless of trade direction, gradually shifting the threshold |