Maintenance Margin Ratios

Maintenance margin ratios are the thresholds that determine the minimum equity level needed to keep a position open. Unlike initial margin, which is only relevant at the start of a trade, maintenance margin is a continuous requirement.

The ratio is usually set lower than the initial margin, providing a safety net for minor price fluctuations. If the equity ratio falls below this maintenance level, the account enters the liquidation zone.

These ratios are vital for preventing the accumulation of negative balances that could threaten the exchange's solvency. Exchanges often tier these ratios based on the size of the position, with larger positions requiring higher maintenance margins to account for their market impact.

Understanding these ratios is crucial for long-term traders who need to manage their collateral levels to avoid involuntary liquidations. It is a key metric in the ongoing monitoring of leveraged risk.