Initial Vs Maintenance Margin

Initial margin is the amount of collateral required to open a new leveraged position, serving as a buffer against initial volatility. Maintenance margin is the minimum amount of equity that must be held in the account to keep the position open.

If the account balance falls below the maintenance margin, the position is at risk of liquidation. The gap between initial and maintenance margin provides a safety cushion for the exchange.

These requirements are determined by the risk profile of the asset and the volatility of the market. High leverage usually implies higher initial margin requirements to mitigate systemic risk.

Managing these levels is fundamental to responsible trading.