Maintenance Margin & Forced Liquidation Explanation

I. What Is Maintenance Margin?

Maintenance margin refers to the minimum margin level that users must maintain while holding an open position.

If the margin in the account falls below this level, a forced liquidation may be triggered.

II. What Is Forced Liquidation?

When the available margin in the account falls below the maintenance margin requirement, the system will automatically trigger forced liquidation to prevent the account from incurring a negative balance.

• Long positions: Forced liquidation is triggered when the mark price falls below the liquidation price.

• Short positions: Forced liquidation is triggered when the mark price rises above the liquidation price.

Liquidation Price Calculation (Using USDT-M Contracts as an Example):

• Isolated Margin Mode: Only affects the margin of the specific position

• Long:

Liquidation Price = (Position Value − (Position Margin − Maintenance Margin − Fees)) / Position Size

• Short:

Liquidation Price = (Position Value + (Position Margin − Maintenance Margin − Fees)) / Position Size

• Cross Margin Mode: Affects the entire contract account

• Long:

Liquidation Price = (Position Value − (Account Balance − Maintenance Margin − Fees)) / Position Size

• Short:

Liquidation Price = (Position Value + (Account Balance − Maintenance Margin − Fees)) / Position Size

Influencing Factors:

• Maintenance margin rate: Varies depending on the position size and leverage level.

• Market volatility: Extreme market fluctuations may cause deviations in the liquidation price.

III. How to Reduce the Risk of Forced Liquidation?

1.Monitor market volatility: Pay close attention to market movements, especially during periods of high volatility.

2.Allocate margin reasonably: Avoid keeping margin levels too low and maintain sufficient reserve funds.

3.Use risk management tools: Set stop-loss orders, choose isolated margin mode, and adjust leverage levels to reduce risk.

IV. Special Notes

Maintenance margin is not refundable after forced liquidation, as it is used to prevent the risk of a negative account balance.

Under extreme market conditions, liquidation prices may deviate. Users are advised to implement proper risk management measures.