What is Margin in Crypto Trading?
In virtual contract markets, traders only need to deposit a small percentage of the total contract value as collateral to participate in buying and selling contracts. This collateral is known as virtual contract margin.
OKEx offers two margin systems:
- Cross Margin: Uses shared balance across all positions
- Isolated Margin: Allocates fixed margin per position
Margin Calculation Methods
| Margin Type | Calculation Formula |
|---|---|
| Cross Margin | (Face Value × Contracts) / (Latest Mark Price × Leverage) |
| Isolated Margin | (Face Value × Contracts) / (Entry Price × Leverage) |
The Relationship Between Margin and Leverage
Leverage amplifies both potential profits and risks by allowing traders to control larger positions with less capital.
Example Calculation:
- BTC Price: $10,000
- Leverage: 10x
- Position Size: 1 BTC equivalent
- Contracts = (1 × 10,000) / 100 = 100 contracts
- Required Margin = (100 × 100) / (10,000 × 10) = 0.1 BTC
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Key Margin Ratios Explained
- Initial Margin Rate = 1/Leverage
- Maintenance Margin Rate: Minimum required to keep position open
- Margin Ratio Formulas:
Isolated Margin:
(Fixed Margin + Unrealized P&L) / Position ValueCross Margin:
(Balance + Realized P&L + Unrealized P&L) / (Position Value + Order Frozen Margin × Leverage)Risk Example:
- Position: 1 BTC long at $10,000 (100 contracts)
If price drops to $9,150:
- Unrealized Loss = -0.0929 BTC
- Margin Ratio = 0.64% (below 1% maintenance)
- Triggers liquidation
Advanced Margin Features
Manual Margin Addition
Exclusive to isolated margin mode, this allows precise risk management by adding collateral to specific positions.
Leverage Adjustment
- Increasing Leverage: Reduces required margin if within position tier limits
- Decreasing Leverage: Requires sufficient available balance to cover increased margin needs
Frequently Asked Questions
What happens when my margin ratio gets too low?
When your margin ratio falls below the maintenance level, your position will be liquidated automatically to prevent further losses.
Can I change margin types after opening a position?
No, margin type (cross/isolated) must be selected when opening a position and cannot be changed afterwards.
How often are margin requirements recalculated?
For cross margin, requirements update continuously with price changes. Isolated margin uses fixed entry price calculations.
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Remember: Margin trading carries significant risk - only trade with funds you can afford to lose.