What is initial margin?
Initial margin is the collateral requirement for opening a leveraged position under trading rules. In crypto contract trading, the platform checks whether available collateral can support the intended position. Collateral assets remain account assets; they are not a fee paid to the platform for opening.
How is initial margin calculated?
For contracts requiring collateral as a proportion of position value, the basic calculation is:
Initial margin = position value × initial margin rate
The rate expresses the required collateral as a share of position value. Where selected leverage determines this proportion, the rate is its reciprocal: initial margin is position value divided by leverage.
For example, a planned 1,000 USDT position with 10× leverage has a rate of 1 ÷ 10 = 10%, requiring 1,000 × 10% = 100 USDT. USDT is the denomination asset; the following hypothetical calculations exclude fees and are not any product’s complete order cost.
| Selected leverage | Initial margin rate | Initial margin for 1,000 USDT position |
|---|---|---|
| 2× | 50% | 500 USDT |
| 10× | 10% | 100 USDT |
| 20× | 5% | 50 USDT |
The table compares the same position under different settings. The price used for valuation and the collateral asset still depend on the contract and account mode.
Why can leverage not be chosen arbitrarily?
Platforms set leverage caps for different products and position sizes. Entering a higher tier may reduce maximum leverage and require a higher initial margin proportion. Traders can select only within product limits.
For the same position, absolute price profit and loss depend on quantity and contract rules; changing a displayed leverage setting alone does not increase them.
How is margin allocated and released from submission to closing?
Platforms recalculate collateral requirements as orders and positions change. An ordinary opening order can consume availability before execution, preventing the same collateral from backing multiple positions.
- Submitting an opening order: the platform checks collateral and calculates the order’s allocation. A waiting limit order may consume availability too.
- Order execution: filled quantities form a position; requirements are recalculated using the remaining order and actual position. Allocation changes availability without requiring transfers between accounts.
- Canceling unfilled quantity: unnecessary order allocation is released; the executed position still needs collateral.
- Closing: reduced or ended positions lower requirements. Final availability also depends on results, fees and other allocations.
Isolated margin assigns collateral to a specific position; cross margin shares it within a defined scope. See margin for effects on balances and availability.
Why might an order fail even with enough initial margin?
The order cost checked by the platform can include more than initial margin, such as fee reserves or order loss.
For example, OKX contract rules include order loss in opening costs when execution at the order’s price would immediately create an unrealized loss against the risk valuation price. That valuation reference is the mark price, calculated under platform rules to value positions.
The earlier 100 USDT is therefore only initial margin under the example assumptions; exactly 100 USDT of availability does not guarantee opening that position. Actual requirements follow the product’s order-cost calculation.
How does initial margin differ from maintenance margin?
Initial margin answers how much collateral is needed to open; maintenance margin answers the ongoing requirement. After opening, unrealized price results affect equity—the account value including results—and the platform assesses risk using eligible equity and maintenance requirements.
Within the same product, initial requirements are usually higher, but the two are not separate fees. Actual liquidation checks also consider current positions, eligible equity and fees, rather than simply subtracting the two amounts at opening.
What changes when leverage is adjusted after opening?
Products permitting leverage adjustments may recalculate requirements and availability. Lower requirements and an actual reduction in collateral equity are different events.
For example, releasing an order allocation within cross margin does not mean the assets have left the shared collateral scope; actually reducing collateral assigned to an isolated position changes its capacity to absorb price movements. Whether and where collateral is released depend on product rules and actions. See leverage for selected versus effective leverage.
Related terms
Explore maintenance margin, margin ratios and margin, or return to the crypto glossary.
References
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