Introduction
As part of our continuous efforts to enhance trading products and user experience, we’ve implemented reductions in base maintenance margin requirements for key contracts like XBT and ETH—now set at 0.35% and 0.7%, respectively, among the lowest in the market. This adjustment aims to provide traders with greater flexibility during volatile market conditions while managing risk effectively.
Why Margin Matters in Futures Trading
- Leverage Fundamentals:
Futures trading allows positions larger than available capital through leverage. Unlike spot markets (where brokers lend funds), exchanges set and manage leverage ratios, acting as central counterparties to ensure trade settlement. Margin Types:
- Initial Margin: Collateral required to open a position (e.g., 10% for a $100 contract).
- Maintenance Margin: Minimum account balance to keep a position open (e.g., 5%).
Example: If a contract value drops to $105 from $100, the seller must top up funds to meet the 5% maintenance threshold or face liquidation.
Key Benefits of Lower Maintenance Margins
1. Reduced Liquidation Risk
Lower maintenance margins (e.g., 3.5% vs. 5%) increase the price buffer before liquidation. A trader’s position can withstand larger fluctuations (6.5% vs. 5% in our example), providing more time to manage margins during volatility.
2. Enhanced Trading Flexibility
- Longer Position Holding: Lower margins allow traders to maintain positions longer without frequent top-ups.
- Improved Risk Management: More cushion against sudden price swings.
3. Market Confidence
Frequent, measured adjustments (like BitMEX’s 2020 reductions) reflect market maturity and exchange stability, fostering trader trust.
Real-World Example: XBTUSD Perpetual Swap
Scenario:
- Position: Long
- Entry Price: $10,000
- Contract Size: 25,000
- Leverage: 100x
| Maintenance Margin | Liquidation Price | Buffer Increase |
|--------------------|-------------------|-----------------|
| 0.50% | $9,951.00 | — |
| 0.35% | $9,936.50 | +$14.50 |
👉 Explore advanced trading strategies to optimize margin use.
FAQs
Q1: Does lower maintenance margin increase my risk?
A: No. While it delays liquidation, risk is transferred to the exchange’s insurance fund, which covers excess losses.
Q2: How often do exchanges adjust margin requirements?
A: Periodically, based on market volatility, liquidity, and asset performance.
Q3: Can I lose more than my initial margin?
A: On BitMEX, losses are capped at your invested capital due to auto-liquidation mechanisms.
Conclusion
Reducing maintenance margins supports trader adaptability in evolving markets. As crypto derivatives mature, exchanges will continue refining margin policies to balance risk and opportunity.
👉 Learn more about margin trading best practices.
Stay informed—adjust your strategies as market conditions change.