Initial and Maintenance Margin in Crypto Futures

Summary

The document explains initial margin as the collateral needed to open a futures position and maintenance margin as the minimum collateral needed to keep it open. It relates initial margin to position value and leverage, then describes a tiered maintenance-margin structure in which larger positions may face higher rates. If collateral falls below the maintenance threshold, liquidation may follow.

It also compares isolated margin, where collateral is allocated to a position, with cross margin, where available account balance is shared across positions. The article notes that fees and funding can reduce the buffer available to support positions, and recommends monitoring the margin ratio and using stop-loss orders. Its tier table is explicitly simplified, and actual contract rates may vary. The information is exchange-specific and may become outdated; it does not provide a complete liquidation formula or quantify how fees, funding, and mark-price movements change the threshold.

Key ideas

• Initial margin is collateral required to open a futures position, while maintenance margin supports an open position.
• The document describes maintenance requirements as tiered, with larger positions potentially subject to higher rates.
• Isolated margin confines allocated collateral to a position, while cross margin shares account balance across positions.
• Trading fees and funding can reduce the collateral buffer and increase liquidation risk.
• The example rates are simplified and should not be assumed to match current contract specifications.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.