What is maintenance margin?

The minimum equity you must keep in a leveraged position before the exchange starts closing it.

Fall below the maintenance requirement and the liquidation engine takes over, selling or buying to flatten your exposure whether or not you are at your desk. Exchanges publish maintenance margin as a percentage that rises in tiers with position size, so a large position needs proportionally more collateral than a small one in the same market.

Adding margin or reducing size are the only two ways back above the line once price moves against you. The venue's margin tier table is the authoritative figure, and it is worth reading before opening rather than after.

How it works

Two requirements govern a leveraged position. Initial margin is what you must post to open it. Maintenance margin is the lower level you must stay above to keep it. The distance between them is the room you have to be wrong.

Equity is the collateral backing the position plus or minus the running profit or loss, less accrued fees and funding. When equity falls to the maintenance requirement, liquidation begins.

Requirements are tiered by notional size. Small positions sit in the lowest tier with the lowest requirement; as notional grows, the requirement steps up, because a large position is harder to unwind without moving the market. Crossing a tier boundary recalculates the requirement across the whole position rather than only the added amount, which can put a comfortable position into trouble immediately after you add to it.

Two further points decide how far you actually are from liquidation. The trigger uses a mark price derived from an index of outside venues, not the last trade on this exchange, so the level can be reached even when this book has not traded there. And margin mode determines what counts as equity: isolated margin uses only the collateral assigned to the position, while cross margin uses the whole account balance.

Example

Illustrative arithmetic. You open a $20,000 notional position and post $2,000, so 10 times leverage. The tier's maintenance requirement is 1 percent of notional, which is $200.

Equity starts at $2,000. It reaches $200 after $1,800 of loss, which is a 9 percent adverse move on $20,000 of notional. So the position tolerates 9 percent before liquidation, less whatever fees and funding have accrued.

Now double the size to $40,000 notional on the same $2,000, which is 20 times leverage, and suppose the requirement in that tier rises to 1.5 percent, or $600. Equity reaches $600 after $1,400 of loss, which is only 3.5 percent of a $40,000 position. Doubling the leverage cut the survivable move by well over half, because the requirement rose at the same time.

Why it matters when you buy

A spot purchase has no maintenance requirement and cannot be liquidated, which is the main structural difference from leveraged trading. Leveraged products are also restricted for retail customers in several jurisdictions, shown on the jurisdiction pages. For an ordinary purchase, the fee comparison and the liquidity view are the figures that determine what you actually pay.

Related terms

• initial margin: what you post to open the position
• liquidation: what happens when equity falls to this level
• margin: the collateral behind a borrowed position
• mark price: the reference the trigger uses
• cross margin: the whole balance counting as equity
• isolated margin: only assigned collateral counting

Questions

Where do I find my exchange's requirement?

In the margin tier table for the specific market, published in the venue's own documentation. It lists notional bands with the initial and maintenance percentages for each.

Why did my requirement go up without me trading?

Either the position's notional grew with the price and crossed a tier boundary, or the venue changed its tier table, which exchanges do during volatile periods.

Does hitting maintenance margin mean I lose everything?

You lose the equity down to that level plus a liquidation fee, and on venues that liquidate partially, only enough of the position is closed to restore the requirement.