In our ongoing effort to enhance product offerings and improve the trading experience for users, we’ve recently implemented a series of reductions in base maintenance margin requirements. The latest update sets the maintenance margin for flagship contracts—XBT and ETH—at just 0.35% and 0.7%, respectively, among the lowest available across global markets.
With recent price movements and heightened market volatility, traders now more than ever need clarity on the risks involved in leveraged trading—and how changes in margin requirements can directly affect their positions. This article explores the role of margin in futures trading, why it matters, and how lowering maintenance margins benefits traders across the board.
👉 Discover how lower margin requirements can boost your trading flexibility today.
What Is Margin in Futures Trading?
Traders often aim to open positions larger than their current capital allows. This is made possible through leverage—a tool that amplifies exposure without requiring full upfront payment.
In spot markets, leverage typically involves borrowing funds from a broker to purchase assets. To protect against losses, brokers require collateral, known as margin, to cover potential declines in asset value. If prices fall significantly, the broker may liquidate part of the position to offset losses.
Futures trading operates differently. Instead of buying or selling physical assets, traders enter into contracts based on future price movements. For example, if two parties agree on a contract at $100 and it settles at $110, the seller pays the $10 difference to the buyer.
To prevent default—especially from sellers who might walk away—exchanges act as a central counterparty (CCP), guaranteeing settlement. To ensure this system works smoothly, exchanges collect an initial deposit from both sides before any trade begins.
Let’s say a hypothetical contract historically trades between $90 and $110. The exchange might collect $10 from each party as a safety buffer—enough to cover typical price swings by settlement.
This initial deposit is called the initial margin. In this example, with a $100 contract requiring $10 upfront, traders are using 10x leverage (10% initial margin). One of the key advantages of crypto futures exchanges is that leverage is built into the contract structure, managed by the platform rather than third-party brokers.
What Is Maintenance Margin?
While initial margin gets a trade started, maintenance margin ensures it stays active.
If prices move sharply—say, our contract jumps to $120—the original $10 deposit may no longer cover potential losses. Without safeguards, the exchange could face a shortfall when settling winning positions.
To prevent this, exchanges continuously monitor account equity relative to the contract’s current value. They track unrealized losses and deduct them from available margin.
The maintenance margin is the minimum equity level a trader must maintain to keep their position open. If equity drops to this threshold, the exchange triggers a liquidation (also known as auto-deleveraging or forced exit).
For example:
- Initial margin: 10%
- Maintenance margin: 5%
- Contract value: $100
A short seller starts with $10. As the price rises to $105, their unrealized loss hits $5—reducing available equity to exactly 5% of the contract value. At this point, the position is liquidated automatically.
Unlike traditional finance—where brokers call clients for margin top-ups or pursue debts beyond collateral—crypto exchanges like BitMEX ensure losses cannot exceed deposited funds. When equity reaches maintenance margin levels, the system takes over, closes the position, and uses the insurance fund to absorb any remaining deficit.
How Lower Maintenance Margins Benefit Traders
Margin levels vary by contract, influenced by factors like liquidity and volatility. Illiquid or highly volatile instruments often carry higher maintenance margins and lower maximum leverage.
Let’s revisit our earlier example:
- Contract value: $100
- Initial margin: 10% ($10)
- Original maintenance margin: 5% → liquidation at $105
- New maintenance margin: 3.5% → liquidation at $106.50
By lowering the maintenance requirement, traders gain an extra 6.5% buffer instead of 5%. This means they can withstand larger adverse price moves before liquidation—reducing forced exits during volatile swings.
Although this improves trader resilience, the risk isn’t eliminated—it shifts to the insurance fund, which now has less buffer before absorbing losses. However, with robust risk modeling and sufficient fund reserves, this trade-off supports a healthier, more resilient trading environment.
👉 See how optimized margin structures empower smarter trading strategies.
Real-World Example: XBTUSD Perpetual Swap
Let’s analyze a live scenario using the XBTUSD perpetual swap—the most liquid contract on the platform.
Trade Details
- Direction: Long
- Entry Price: $10,000
- Position Size: 25,000 contracts
- Contract Value: 2.5 XBT (25,000 / 10,000)
- Leverage: 100x
- Funding Rate: 0.01%
Initial margin remains constant in both cases:
- Initial Margin Required: 0.02876875 XBT
Now let’s compare outcomes under old vs. new maintenance rules.
Scenario A: Maintenance Margin at 0.50%
- Maintenance Margin: 0.01464375 XBT
- Liquidation Price: $9,951.00
Scenario B: Maintenance Margin Reduced to 0.35%
- Maintenance Margin: 0.01089375 XBT
- Liquidation Price: $9,936.50
Wait—didn’t lower requirements push liquidation lower?
Yes—but here’s why: lower maintenance margins mean less equity is required to keep the position active. So while the absolute buffer decreases slightly in dollar terms due to fee calculations, the effective risk profile improves because:
- Traders face fewer premature liquidations.
- The system reduces pressure during short-term volatility spikes.
- Insurance fund utilization remains within manageable bounds.
Note: Real-world calculations include fees and funding costs to prevent instant liquidations at entry. Future updates will clarify these mechanics in detail.
Frequently Asked Questions (FAQ)
Q: Does lowering maintenance margin increase my risk of losing money?
A: No. Your maximum loss remains limited to your initial deposit. Lower maintenance margins reduce liquidation frequency but do not increase personal financial exposure.
Q: Who bears the risk when liquidations occur closer to entry prices?
A: The insurance fund absorbs excess losses after liquidation. Platforms manage this fund carefully to ensure long-term stability.
Q: Can I use higher leverage now that margins are lower?
A: Not directly. Leverage depends on initial margin requirements, which haven’t changed. However, lower maintenance margins give you more breathing room under price stress.
Q: Are all contracts affected equally by this change?
A: No. Only highly liquid contracts like XBTUSD and ETHUSD received adjustments. Volatile or low-volume pairs retain higher safeguards.
Q: How often are margin requirements reviewed?
A: Continuously. Teams monitor market conditions, volatility trends, and insurance fund health to make data-driven adjustments.
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Final Thoughts
This marks our third reduction in base maintenance margin since April 2025—a move aligned with our mission to refine trading conditions as the crypto market matures. By offering tighter thresholds on major contracts, we empower traders with greater flexibility and resilience during turbulent price action.
As liquidity deepens and infrastructure evolves, expect ongoing optimizations in contract design, margin frameworks, and risk management systems—all aimed at delivering a safer, more efficient trading experience.
Keywords: maintenance margin, futures trading, leverage, liquidation price, initial margin, crypto futures, risk management, margin requirements