What Is the Role of the Maintenance Margin in the Liquidation Process?

The maintenance margin is the minimum amount of collateral required to keep a leveraged position open. It is a percentage of the total position value and acts as a critical threshold for the liquidation engine.

If market movements cause a trader's initial margin to deplete to the point where it falls below the maintenance margin level, the liquidation process is automatically triggered. This ensures that the position is closed before the trader's collateral is completely wiped out, providing a small buffer to cover transaction fees and potential price slippage during the forced closure.