1. What is Margin Ratio?
Margin ratio reflects the safety level of your position—the higher the ratio, the safer your position. Below are calculation methods for different margin modes:
1) Single-Coin Margin Mode (Cross Margin)
Margin Ratio = (Available Balance + PNL - Pending Sell Orders - Option Buy Orders - Isolated Margin Requirements) / (Maintenance Margin + Liquidation Fee)
2) Multi-Coin Margin Mode (Cross Margin)
Margin Ratio = Effective Margin / (Maintenance Margin + Liquidation Fee)
3) Isolated Margin Mode (Single/Multi-Coin)
- Long Positions: [(Position Value - (Debt + Interest)/Mark Price)] / (Maintenance Margin + Fee)
- Short Positions: [(Position Value - |Debt + Interest| × Mark Price)] / (Maintenance Margin + Fee)
2. How is Closing PNL Calculated?
- Long: (Face Value × Contract Multiplier × Size) / Entry Avg. Price - (Face Value × Contract Multiplier × Size) / Exit Avg. Price
- Short: (Face Value × Contract Multiplier × Size) / Exit Avg. Price - (Face Value × Contract Multiplier × Size) / Entry Avg. Price
3. What Are Partial Liquidation and Forced Liquidation?
When market moves against your position and margin ratio ≤ (Maintenance Margin + Fee Rate):
- Cross Margin: Triggers partial liquidation or full forced liquidation.
- Isolated Margin: Only the affected position is liquidated.
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4. What Is Auto-Deleveraging (ADL)?
ADL activates during extreme volatility to prevent systemic risk by closing counterparty positions at mark price, avoiding cascading liquidations. Users receive notifications when affected.
5. Understanding Risk Reserve Funds
These funds cover potential liquidation losses, sourced from platform allocations and leftover liquidation amounts. Segregated by product (e.g., futures, options) and currency.
6. Opening/Closing Mode vs. Buy/Sell Mode
- Opening/Closing: Allows simultaneous long/short positions.
- Buy/Sell: Restricts to one-directional trading. Switching modes requires zero open positions/orders.
Key Terminology Explained
- Coin-Margined Contracts: Priced in USD, collateral and PNL in crypto (e.g., BTC).
- USDT-Margined Contracts: Priced and settled in USDT.
- Cross Margin: Uses entire balance as collateral; higher risk/reward.
- Isolated Margin: Limits loss to initial margin per position.
- Leverage: Up to 125×—higher leverage amplifies both gains and risks.
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FAQ Section
Q1: How often is margin ratio updated?
A1: Real-time, based on mark price fluctuations.
Q2: Can I change margin modes mid-trade?
A2: No—clear all positions/orders first.
Q3: What happens during ADL?
A3: Counterparties ranked by profit are automatically closed, converting PNL to balance.
Q4: Is risk reserve shared across currencies?
A4: No, each currency/product has a dedicated reserve.
Q5: Why use mark price for liquidation?
A5: Prevents price manipulation and false liquidations.
Q6: How to estimate liquidation price?
A6: Use platform tools but prioritize monitoring margin ratio for accuracy.