Maintenance Margin Breach

A maintenance margin breach occurs when the value of a trader's collateral falls below the minimum required level to maintain an open position. This triggers the liquidation process.

The maintenance margin is set to provide a buffer against market volatility. If the market moves too quickly, the trader may not have time to add more collateral, leading to an immediate liquidation.

This is a common point of failure for inexperienced traders who use high leverage without understanding the risks. It is a critical concept in all margin-based trading systems, including those in the crypto and derivatives markets.