Account Cushion

An account cushion refers to the excess equity held in a margin account beyond the minimum maintenance requirement mandated by a brokerage or exchange. In the context of cryptocurrency derivatives and options trading, this buffer is vital for absorbing temporary market volatility without triggering an automatic liquidation of open positions.

It represents the financial space between a trader's current account balance and the threshold where the platform forcibly closes positions to cover potential losses. Maintaining an adequate cushion helps traders avoid margin calls during sudden price swings.

It is a fundamental risk management tool that quantifies a trader's resilience against adverse market movements. By keeping this buffer, participants ensure they have sufficient collateral to support their leverage.