This article explains how Initial Margin and Maintenance Margin are calculated in Isolated Margin Mode in futures trading.
๐ Overview of Isolated Margin Mode
In Isolated Margin Mode, margin is managed individually for each position.
This means that if a loss occurs in one position, it will not directly affect the margin of other positions.
โ ๏ธ Please note:
You cannot change leverage if:
โข There is an open position
โข There are open (unfilled) orders
Leverage can only be adjusted when there are no open positions or orders.
๐ฐ Initial Margin Calculation
Initial Margin is the amount of margin required to open a new position.
๐ Formula
Initial Margin = Entry Price ร Position Size รท Leverage
This value is used to calculate the margin required when placing an order.
๐ก In Isolated Margin Mode,
Initial margin is calculated and managed per position.
๐ก Maintenance Margin Calculation
Maintenance Margin is the minimum amount of margin required to keep a position open.
In Isolated Margin Mode, maintenance margin is calculated individually for each position.
๐ Formula
Maintenance Margin = Position Margin ร Maintenance Margin Rate
๐ Key Features of Isolated Margin Mode
โ
Margin is managed separately for each position
โ
Risk is limited to each individual position
โ
Easier position-level risk control
โ ๏ธ Important Notes
If the margin of an individual position falls below the maintenance margin requirement,
only that specific position may be liquidated.
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