What Is Maintenance Margin?
Maintenance margin is the minimum amount of collateral that must be held in a margin account to keep a leveraged position open. If the account equity drops below the maintenance margin (due to adverse price movement), the exchange triggers liquidation. Maintenance margin is typically expressed as a percentage of the position value.
How Maintenance Margin Works
Different from initial margin (the collateral required to open a position), maintenance margin is usually lower — for example, 0.5-1% for high-tier traders and 2-5% for retail. Exchanges use tiered maintenance margins where larger positions require higher percentages, preventing oversized positions from creating systemic risk during liquidation.
Why It Matters for Traders
Knowing your maintenance margin level and corresponding liquidation price is non-negotiable for leveraged trading. The formula: Liquidation Price ≈ Entry Price × (1 - 1/Leverage + Maintenance Margin Rate) for longs. Always set stop-losses well above the liquidation price — getting liquidated means losing your entire margin, while a stop-loss preserves most of it.
How It Works on CEX Perps
On centralized perpetual futures venues, maintenance margin shows up in the position panel, the funding timer, or the liquidation engine rather than as a separate product. Traders usually check it next to mark price, margin mode, and open interest so they do not size a trade from last price alone.
Example numbers only (not a live quote): if you hold a $10,000 notional long with 5x leverage, your initial margin is about $2,000. A move against you of roughly 20% of that notional can push the position near maintenance margin depending on the venue formula. Always read the venue's own liquidation rule before you size.
Formula and Worked Example
Use this only as a labeled example. It is not a live market print.
- Notional = coin size × mark price.
- Initial margin ≈ notional ÷ leverage.
- Distance to liquidation depends on maintenance margin, fees, and whether you use cross or isolated margin.
Example: 0.1 BTC long, mark $60,000, leverage 10x → notional $6,000, initial margin about $600. If maintenance margin is near 0.5% of notional, a modest adverse move can close the trade even when your thesis is still intact.
Common Mistakes
- Treating a single print of maintenance margin as a trade signal without checking funding, open interest, and your liquidation price.
- Mixing venue conventions (coin-margined vs USDT-margined, cross vs isolated) and reading the wrong mark.
- Copying example numbers from a glossary into live size without checking the current book depth and fee schedule.
- Ignoring related terms that change the meaning of the print on a given day.
