Tiered Margin Scaling

Tiered margin scaling is the process of automatically increasing the margin percentage required as a position grows in size. This ensures that as a trader increases their exposure, the amount of capital they have at risk increases at a faster rate.

This discourages the use of extreme leverage on very large positions, which is where the greatest systemic risk resides. It is a form of progressive risk management that balances the need for capital efficiency with the requirement for platform safety.

The scaling factor is usually pre-defined in the exchange rules and applied transparently.