# Initial and Maintenance Margins ## Initial Margin The Initial Margin is the minimum amount of funds a trader must deposit into their account to open a margin position. Simply put, it’s the collateral reserved in the trading account and used to open positions. It is calculated as the ratio of the position size to the leverage: $$ Initial Margin = NominalPosition Value / Leverage $$ $$ Position Value = Position Quantity \* Average Price $$ #### ***Example:*** Due to the growing trend in BTC, trader Alex opens a long position from his point of interest (POI) and enters a 9,000 USDT trade using 30X leverage. $$ Initial Margin = 9,000 / 30 = 300 USDT $$ Opening the same position with the same amount but higher leverage (75X) would reduce the initial margin to 120 USDT. $$ Initial Margin = 9,000 / 75 = 120 USDT $$ Thus, changing the leverage only affects the initial margin amount, while the quantity of BTC in the position remains unchanged. However, higher leverage directly impacts the liquidation level: the higher the leverage, the closer the liquidation. ## Maintenance Margin Maintenance margin is the minimum amount of collateral that a trader must maintain in their account to keep existing positions open.\\ \ The MM rate is always lower than the initial margin rate. \ \ The role of MM is to create a protective buffer that allows an open position to withstand a certain level of unrealized losses before a liquidation procedure is initiated.\ \ If the total value of your collateral in the account (including current P\&L) drops below the required maintenance margin level, your position will be forcibly closed (liquidated) by the exchange to prevent further losses. MM calculation formula: $$ Maintenance Margin = NominalPosition Value × Maintenance Margin Rate $$ The difference between the initial and maintenance margin is a key element of the risk management system. This gap between IM and MM forms a "safety zone" for the trader. It represents a loss buffer that the position can "absorb" before liquidation begins. If the IM were equal to the MM, any minimal price movement against the trader would immediately lead to liquidation. This safety buffer gives the trader time to deposit additional funds or close the position manually, or at least wait until the price becomes potentially favorable. #### *Example:* We have already determined that opening a position with 30× leverage requires Alex to provide 300 USDT as the initial margin. Assuming the maintenance margin rate for BTC is 1.85%, the formula for calculating the maintenance margin would be: $$ Maintenance Margin=9,000\*0,0185=166.5 USDT $$ {% hint style="warning" %} **Important!**\ No additional initial margin is required to close or reduce a position. On the contrary, opening a position reserves margin, while closing it frees it up. That is why a trader can always place an order that reduces their risk (like a take-profit or stop-loss), even if they have no available funds in their account. {% endhint %} --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.evedex.com/key-features-and-components/trading-platform-and-matching-engine/margins.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.