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.