How Does ‘Initial Margin’ Differ from ‘Maintenance Margin’?
Initial margin is the amount of collateral required to open a new leveraged position. It is always a higher percentage of the notional value than the maintenance margin.
Maintenance margin is the minimum collateral required to keep the position open after it has been established. The difference between the two provides a buffer against losses before liquidation is triggered.
Glossar
Initial Margin Requirement
Definition ⎊ Initial margin requirement specifies the minimum amount of capital a trader must deposit into a margin account to open a new leveraged position in a derivative contract.
Initial Margin
Collateral ⎊ Initial margin represents the equity a trader must deposit with a broker or exchange as a good faith commitment to cover potential losses arising from derivative positions, notably within cryptocurrency markets.
Notional Value
Scale ⎊ Notional Value refers to the total market value of the underlying asset controlled by a derivatives position, calculated by multiplying the contract size by the current market price, irrespective of the actual margin capital posted.
Maintenance Margin
Collateral ⎊ Within cryptocurrency derivatives and options trading, the maintenance margin represents the minimum equity a trader must maintain in their account to cover potential losses.