Minimum Margin Requirement

The Minimum Margin Requirement is the baseline amount of capital that must be held in an account to maintain a leveraged position. It is the threshold that defines the limit of a trader's risk exposure.

If the account balance drops below this amount due to market losses, the protocol or exchange will trigger a liquidation. This requirement is set to ensure that the trader always has enough equity to cover potential losses.

It is a crucial component of financial derivatives, preventing traders from accumulating debt that they cannot repay. By enforcing this requirement, platforms protect their own solvency and maintain market stability.

Traders must understand this requirement to avoid unexpected liquidations during periods of high market volatility.