Maintenance margin is the minimum amount of funds required to maintain a position.
The maintenance margin depends on the risk limit chosen by traders. The higher the risk limit level, the lower the maximum leverage that can be used. By default, the risk limit of each trading pair will use the lowest maintenance margin level.
Do note that positions will be liquidated when the margin drops below the maintenance margin level. Let's take a look at how the maintenance margin in USDC perpetual trading is calculated.
Regular Margin Formula:
Maintenance Margin = Position Size × Position Average Price × Maintenance Margin Rate + Estimated Fee to Close Position
Position Average Price = Total Contract Value / Total Trade Size
Example
Trader A holds a 0.5 BTC contract at a price of $50,000 with 10x leverage. He expects prices to continue to rise. Therefore, Trader A buys another 0.5 BTC for $52,000. The maintenance margin (MM) rate is 0.5%.
Position Average Price = (0.5 × 50,000) + (0.5 × 52,000) / 1 = 51,000
Maintenance Margin = 1 × 51,000 × 0.5% = 255 USDC
Please note that the maintenance margin shown in the position tab includes the taker fee, which may be incurred in closing the position. In this case, the maintenance margin will be higher than 255 USDC.
The estimated closing position fee is calculated slightly differently, depending on the direction of the position — long or short.
Long Positions Formula:
Estimated Fee to Close Position = Position Size × Position Average Price × (1 − 1 / Leverage ) × Taker Fee Rate
Revisiting Trader A’s case, Trader A holds a 0.5 BTC contract at a price of $50,000 with 10x leverage. He expects prices to continue to rise. Therefore, Trader A buys another 0.5 BTC for $52,000.
According to the calculation of the above example:
Estimated Fee to Close Position = 1 × 51,000 × (1 − 1 / 10 ) × 0.06% = 27.54 USDC
In this case, the initial margin for the position is (255 + 27.54) = 282.54 USDC.
Short Positions Formula:
Estimated Fee to Close Position = Position Size × Position Average Price × (1 + 1 / Leverage) × Taker Fee Rate
Revisiting Trader A’s case: Trader A holds a 0.5 BTC contract at a price of $50,000 with 10x leverage. He expects prices to continue to rise. Therefore, Trader A buys another 0.5 BTC for $52,000.
According to the calculation of the above example:
Estimated Fee to Close Position = 1 × 51,000 × (1 + 1 / 10 ) × 0.06% = 33.66 USDC
In this case, the initial margin for the position is (255 + 33.66) = 288.66 USDC.
Portfolio Margin (Temporarily unavailable, will be back on April 2022)
With the portfolio margin, the system will calculate the possible profit and loss of the position based on 11 price change percentages (see table below), and then take the largest loss value to calculate the position maintenance margin.
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11 price change percentages |
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−10% |
−8% |
−6% |
−4% |
−2% |
0% |
2% |
4% |
6% |
8% |
10% |
To learn more about possible profit and loss for your position, please head to USDC Account under Portfolio Margin.