What is margin in perpetual trading?

Margin is the amount of funds that must be deposited by an investor to the exchange in order to open a position for perpetual trading. This amount is used as a guarantee by the exchange against potential losses of the trader. For example, to open a position worth $1,000 with an initial margin of 20% (5x leverage), the margin that needs to be prepared is $200.

In addition to opening a position, margin is also needed to ensure that the position remains open or is called maintenance margin. It is the amount of margin balance required at all times in your account wallet to ensure that the position remains open.

If the margin balance falls below the maintenance margin, the trader will be liquidated. For example, to maintain a $1,000 position with a maintenance margin requirement of 5%, the locked margin is $50.

💡 Before being liquidated, the exchange will give a warning to the trader through a so-called margin call. If a trader's account is margin called, he will not be able to open new positions or place new orders until he adds margin to his futures account.