Maintenance Margin & Forced Liquidation Explanation

The maintenance margin is the minimum amount of margin required to keep a position open. When the account equity falls below this level, the position enters liquidation risk. It is typically calculated based on the position’s nominal value and the maintenance margin rate:

Maintenance Margin = Position Nominal Value × Maintenance Margin Rate

When Account Equity ≤ Maintenance Margin, the system will trigger forced liquidation, automatically closing all or part of the position at market price or the best available executable price. This prevents losses from expanding or the account from entering negative equity. Once liquidation begins, it cannot be manually cancelled, and any remaining balance (if applicable) will be returned to the account.

The liquidation price is determined by factors such as leverage, position size, maintenance margin rate, margin balance, and the mark price. Higher leverage results in a liquidation price closer to the entry price, which increases risk.

To reduce liquidation risk, traders should maintain sufficient available margin, use reasonable leverage, set stop-loss or trailing-stop orders, avoid over-leveraging, and monitor price movements closely. Understanding maintenance margin and liquidation mechanisms helps manage positions and risks more effectively in volatile markets.