In Cryptocurrency Trading, What Is ‘Initial Margin’ and ‘Maintenance Margin’ for Perpetuals?
Initial margin is the minimum amount of capital required to open a leveraged position in a perpetual contract. Maintenance margin is the minimum equity level that must be kept in the account to keep the position open.
If the account equity falls below the maintenance margin level, a margin call or liquidation will occur. These margins are crucial for managing leverage and risk.
Glossar
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.
Required Initial Margin
Collateral ⎊ Required Initial Margin represents a quantified amount of capital, stipulated by exchanges or clearinghouses, that a participant must deposit as a performance bond prior to establishing a derivatives position, functioning as a first line of defense against counterparty credit risk.
Perpetual Contract
Mechanism ⎊ Perpetual contracts, within cryptocurrency and derivatives markets, represent agreements to buy or sell an asset at a specified price, differing from traditional futures by lacking an expiration date.
Leveraged Position
Position ⎊ A leveraged position, within cryptocurrency derivatives, options trading, and broader financial derivatives, represents an exposure exceeding the initial capital outlay, amplified through instruments like perpetual futures contracts, leveraged tokens, or options.