Margin

Margin is the money you must deposit with the exchange as collateral when opening a leveraged position. Since leverage is essentially trading with borrowed funds, the exchange needs collateral to ensure you won't default — that collateral is your margin. It comes in two kinds: initial margin is the minimum you must post to open, set by the leverage multiple (10x means 1/10 of position value); maintenance margin is the minimum level to keep the position from being closed, usually much lower than initial. When your account equity drops below maintenance margin due to losses, liquidation is triggered.

The margin system exists to make trading with borrowed money risk-controllable. Without margin, the exchange would be lending you money to gamble unconditionally — lose, and you could walk away leaving bad debt behind. Margin quantifies that risk: you must first put up your own money, which is the buffer for your losses and the exchange's last line of defense. Maintenance margin goes further — it lets the exchange close your position before your loss eats through the margin entirely, ensuring bad debt almost never occurs. The whole mechanism is what lets leveraged trading operate at scale.

How much margin you post directly determines your margin ratio and where your liquidation price sits. For the same $10,000 long, posting 1,000 margin (10x) versus 2,000 margin (5x) puts the latter's liquidation price far further away — it withstands twice the drawdown. So adjusting margin is really adjusting your survivability. Second, the cross-vs-isolated choice is crucial: cross margin uses your whole account balance to defend the position, lasting longer but wiping out everything if it blows up; isolated margin only loses what's assigned to that position, capping the loss but liquidating sooner. Understanding both tells you which risk mode you're in.

First, before ordering, check the exchange's initial and maintenance margin requirements and compute the corresponding liquidation price — make sure that level is one you can withstand. Second, beginners should prefer isolated mode, locking a single position's maximum loss within its assigned margin to avoid one liquidation dragging down the whole account. Third, rather than high leverage with little margin, use low leverage with more margin — same exposure, but a far liquidation price and less psychological pressure. Fourth, keep some cash out of margin so that when price moves against you, you have the means to add margin and adjust, rather than passively waiting to be liquidated.