In futures trading, traders are required to hold a percentage of the value of their positions in order to keep the positions open. This amount of value is known as position margin. The higher the leverage a trader uses, the less position margin he/she will need. Binance JEX offers up to 100x leverage.
When the position margin level of an open position drops below the required level or when its unrealized loss is too high, the position will be liquidated. To better explain how this works, we hereby bring in a new concept: maintenance margin, the minimum amount of margin required to keep a position open. The equation to calculate maintenance margin is: Maintenance Margin = Position Value * Maintenance Margin Rate.
1.Position Margin <= Maintenance Margin
2.Position Margin + Unrealized PNL <= Maintenance Margin
A position will be liquidated when either Condition 1 or Condition 2 is triggered. The trader will lose both the rest of the position margin and unrealized profit.
Traders can adjust the leverage used to adjust the margin level required.
If the position value a trader holds is less than 2,000 K (for traders holding no more than 2,000 K, maintenance margin rate is 0.5%), under what circumstances will the position be liquidated.
|Leverage||Theoretical Initial Margin Rate||Maintenance Margin Rate||Theoretical Liquidation Condition
(PNL / Position Margin)
Values in the table above are theoretical values only. In a real trading environment, traders should also take factors including fund fee and premium compensation into consideration.