Margin Ratio Monitoring

Margin ratio monitoring is the continuous process of tracking the relationship between a trader's collateral and their open position value. This is typically done via automated dashboards and alerts provided by the exchange.

Effective monitoring allows traders to make informed decisions about whether to add collateral, reduce position size, or close the trade before a liquidation is triggered. In a high-speed market, this monitoring must be real-time and accurate.

Many advanced traders use automated bots to manage their margin ratios based on pre-set rules. It is the most important daily task for any participant in the derivative market.

Proper monitoring prevents the panic and loss associated with unexpected liquidations.