How Is the Maintenance Margin Level Typically Calculated?
Maintenance margin is typically calculated as a percentage of the notional value of the open position, or based on a tiered risk limit system. The percentage is set by the exchange and increases as the position size (risk limit) grows.
It is always lower than the initial margin. The calculation ensures there is a sufficient buffer to cover potential losses before the account reaches a zero balance.
Glossar
Risk Limit
Constraint ⎊ A risk limit defines the maximum acceptable level of potential loss or adverse price movement that a trading position or the entire portfolio is permitted to sustain before mandatory intervention is triggered.
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.