How Does the Maintenance Margin Level Change with Increasing Leverage?
The maintenance margin level, expressed as a percentage of the notional value, generally increases as the leverage increases. While the absolute dollar amount of the maintenance margin might decrease with higher leverage, the margin requirement as a percentage of the smaller margin deposit becomes more stringent.
Higher leverage means less room for error, requiring a higher percentage of the initial margin to be maintained.
Glossar
Margin Level
Metric ⎊ Margin level is a critical quantitative metric used to assess the health and risk exposure of a leveraged trading account.
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.
Maintenance Margin Level
Collateral ⎊ The maintenance margin level, within cryptocurrency derivatives and options trading, represents the minimum equity a trader must maintain in their account relative to their margin requirements.