How Does Adding Margin to a Cross-Margin Position Affect Its Liquidation Price?
Adding margin to a cross-margin position moves the liquidation price further away from the current mark price. By increasing the total collateral available to back the position, a larger adverse price movement is required before the margin balance drops below the maintenance margin requirement, thus reducing the risk of forced liquidation.
Glossar
Adverse Price Movement
Exposure ⎊ Adverse price movement within cryptocurrency derivatives represents a deviation from anticipated directional forecasts, impacting portfolio valuations and risk parameters.
Adding Margin
Collateral ⎊ The practice of adding margin, within cryptocurrency derivatives and options trading, fundamentally involves augmenting the initial deposit required to maintain an open position.