Minimum Margin

Minimum margin is the absolute lowest level of collateral that a trader must maintain in their account to keep their positions open. If the account equity falls below this level, the exchange will trigger a liquidation.

This is the ultimate danger line. The minimum margin is set by the exchange, but you should treat it as something to avoid at all costs.

You want to maintain a margin well above the minimum so that a temporary dip in the market does not wipe you out. By treating the minimum margin as a boundary you never want to hit, you manage your account with the necessary level of caution.

It is a basic but important concept. If you find yourself consistently close to the minimum margin, you are taking too much risk.

This is a clear signal that you need to reduce your leverage and your position size. It is a critical part of the day-to-day management of any leveraged account.