---
cover: /images/blog/glossary-crypto-terms.jpg
description: "Margin is collateral that supports a derivatives position. Initial and maintenance requirements shape position capacity and the exchange's liquidation process."
tags: ["margin", "collateral", "leverage", "risk-management", "liquidation", "derivatives"]
createdAt: 1713644488000
---
# Margin

Margin is collateral that supports a derivatives position. A trader posts or allocates margin to open a position and meet the exchange's requirements as the position changes in value. Margin is not the same as a trading fee or the maximum possible loss.

## Initial and Maintenance Margin

Initial margin is the amount required to open a position under an exchange's rules. Maintenance margin is the minimum equity required to keep it open. The exchange may calculate requirements from notional size, contract type, risk tier, collateral value, and other positions in the account.

If account equity falls below the applicable maintenance requirement, the exchange can reduce or close the position. The exchange's liquidation process, fees, and remaining collateral depend on its rules.

## Example

A $10,000 position opened with $1,000 of margin has 10 times notional exposure relative to that margin, before fees and other adjustments. The position's PnL changes with its market value. The exchange may also change its margin requirement as notional size or risk tier changes.

That ratio does not give an exact liquidation price. The exchange's maintenance rate, mark price, collateral, funding, and account mode affect the result. [Hyperliquid's margining rules](https://hyperliquid.gitbook.io/hyperliquid-docs/trading/margining) and [OKX's perpetual-swap FAQ](https://www.okx.com/en-sg/help/perpetual-swaps-faq-sg) show venue-specific requirements.

## Margin Modes

Cross margin shares eligible collateral across positions under the exchange's account rules. Isolated margin assigns a separate allocation to a position. These modes change which collateral can support a loss. See [Cross Margin](/glossary/cross_margin), [Isolated Margin](/glossary/isolated_margin), [Leverage](/glossary/leverage), and [Liquidation Price](/glossary/liquidation_price).