What Is Initial Margin versus Maintenance Margin?
Initial margin is the amount required to open a new futures position, ensuring the trader can cover potential losses. Maintenance margin is a lower threshold that the account balance must not fall below.
If the account drops below the maintenance margin, a variation margin call is issued to replenish the account back to the initial margin level.
Glossar
Initial Margin Higher than Maintenance
Requirement ⎊ This configuration mandates a greater initial collateral deposit than the subsequent maintenance level for a leveraged position in crypto derivatives.
Stop Loss versus Margin
Control ⎊ A stop loss is a direct, pre-programmed order to exit a position, offering immediate execution control to limit downside risk on a trade.
Understanding Margin Maintenance
Concept ⎊ Understanding margin maintenance involves grasping the minimum equity level a trader must sustain in their account to keep a leveraged derivatives position open.
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.
Futures Maintenance Margin Levels
Threshold ⎊ Futures maintenance margin levels define the minimum equity required in a trading account to keep an open futures position active.
Maintenance Margin Impact
Impact ⎊ The maintenance margin impact quantifies the systemic effect that a breach of the minimum required collateral level has on a trader's portfolio and the broader market microstructure.
Falling below Maintenance Margin
Margin ⎊ Falling below the maintenance margin represents a critical juncture in leveraged trading across cryptocurrency derivatives, options, and broader financial instruments, signaling a deficiency in the collateral securing open positions.
Margin versus Notional Exposure
Margin ⎊ Margin represents the actual capital required to open and maintain a leveraged derivatives position.
Maintenance Margin Calculation
Calculation ⎊ The maintenance margin calculation, within cryptocurrency derivatives and options trading, represents a dynamic assessment of an account's equity relative to outstanding margin requirements.
Initial Margin Thresholds
Margin ⎊ Initial margin thresholds, within cryptocurrency derivatives and options trading, represent pre-defined levels of collateral required by exchanges or clearinghouses to mitigate counterparty credit risk.