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You open 2,000 USDT at 10x. Where is your 1,000?799Free balance1,000 − 200 − 1 fee799 USDT200Margin2,000 ÷ 10200 USDT10Maintenance0.5% of 2,00010 USDT
You open 2,000 USDT at 10x.Where is your 1,000?Free balance799 USDT7991,000 − 200 − 1 feeMargin200 USDT2002,000 ÷ 10Maintenance10 USDT100.5% of 2,000

A 2,000 USDT position at 10x locks 200 USDT of margin. It must keep 10 of it.

Margin

Margin is the USDT that holds a position open. You lock the initial margin to open it, and the position must keep the maintenance margin or it is liquidated.

Lesson 4 of 86 min3 parts

Updated . Cryptathon rules checked on .

Margin is the USDT you lock to hold a futures position. The initial margin is the position size ÷ leverage, so a 2,000 USDT position at 10x locks 200 USDT, and the fee comes on top. The position must keep the maintenance margin, 0.5% of its size (10 USDT here), or it is liquidated.

By the end, you can

  1. 1Work out the initial margin and the fee to open a position
  2. 2Say how margin and free balance differ under isolated margin
  3. 3Work out a position's equity and its maintenance margin

1 of 3

How much margin do you need to open a position?

Margin is the USDT you lock to hold a perpetual futures position. The initial margin opens the position and is the position size divided by the leverage; the maintenance margin is the least the position must keep, or it is liquidated.

On Cryptathon the initial margin is position size ÷ leverage. The trading fee is a share of the position size, and it comes from your free balance, on top of the margin. A market order pays the taker fee, 0.05%. A limit order that waits in the book pays the maker fee, 0.02%.

Worked example

A 2,000 USDT BTC long at 10x

You open a 2,000 USDT BTC long at 10x with a market order. How much USDT leaves your free balance?

  1. 1
    Find the initial marginPosition size divided by leverage.
    2,000 ÷ 10 = 200 USDT
  2. 2
    Find the fee to openA market order pays the taker fee on the position size.
    2,000 × 0.05% = 1 USDT
  3. 3
    Add themThe fee comes on top of the margin.
    200 + 1 = 201 USDT

Answer201 USDT: 200 USDT of margin and a 1 USDT fee.

One 2,000 USDT position, three leverages5x400 USDT margin10x200 USDT margin20x100 USDT marginBar: the 2,000 USDT position. Fill: your margin.
One 2,000 USDT position,three leverages5x400 USDT margin10x200 USDT margin20x100 USDT marginBar: the 2,000 USDT position.Fill: your margin.
Figure 1 The same 2,000 USDT position needs 400 USDT of margin at 5x, 200 USDT at 10x and 100 USDT at 20x.
Your turn You open a 1,500 USDT ETH position at 5x with a limit order that waits in the book. How much USDT leaves your free balance?
  1. 300 USDT

    That leaves out the fee, which comes on top of the margin.

  2. 300.30 USDT

    Right. 1,500 ÷ 5 = 300 USDT of margin, plus 1,500 × 0.02% = 0.30 USDT of fee.

  3. 300.75 USDT

    That uses the taker fee. A limit order that waits in the book pays the maker fee.

  4. 1,500.30 USDT

    You lock the margin, not the whole position. 1,500 ÷ 5 = 300.

Show the answer

B: 300.30 USDT. 1,500 ÷ 5 = 300 USDT of margin, plus 1,500 × 0.02% = 0.30 USDT of fee.

2 of 3

How is margin different from free balance?

Your USDT is in two places. Your free balance is the USDT that no position is using; new margin and fees come from it. Margin is USDT locked in one position.

On Cryptathon margin is isolated (isolated margin). Each position has its own margin. A loss on one position comes out of that position's margin only, so your free balance and your other positions do not change. When you close, the margin and the PnL go back to your free balance.

Worked example

A loss under isolated margin

You have 1,000 USDT of free balance. You open the 2,000 USDT BTC long at 10x from the first part. Then BTC falls 2.5%. What does your account show?

  1. 1
    Find the free balance after you openThe margin and the fee leave the free balance.
    1,000 − 201 = 799 USDT
  2. 2
    Find the loss on the positionThe move counts on the whole position.
    2,000 × 2.5% = 50 USDT
  3. 3
    Take the loss from the marginThe loss stays inside the position.
    200 − 50 = 150 USDT

AnswerYour free balance is still 799 USDT. The position's margin plus PnL is 150 USDT. If you close now, about 150 USDT comes back, less the fee on the close.

A loss stays inside the marginStartFree 1,000Open 10xFree 799200fee 1BTC −2.5%Free 799150−50
A loss stays inside the marginStartFree 1,000Open 10xfee 1Free 799200BTC −2.5%loss −50Free 799150
Figure 2 Opening the position locks 200 USDT of margin and pays a 1 USDT fee, so 799 USDT stays free. A 50 USDT loss comes out of the margin, and the free balance stays 799.
Your turn You have 500 USDT of free balance and two isolated positions, each with 100 USDT of margin. Position A loses 60 USDT. What is your free balance now?
  1. 500 USDT

    Right. With isolated margin, the loss stays in position A's margin.

  2. 440 USDT

    Under isolated margin, a loss does not come out of the free balance.

  3. 400 USDT

    That takes out position A's margin again. It left the free balance when you opened A.

  4. 0 USDT, because the account is liquidated

    A loss cannot reach the free balance. At worst, position A alone is liquidated.

Show the answer

A: 500 USDT. With isolated margin, the loss stays in position A's margin.

3 of 3

What is maintenance margin?

The equity of a position is its margin plus its unrealised PnL. It is what the position is worth to you right now, and it moves with every price change.

The maintenance margin is 0.5% of the position size. If losses bring equity down to the maintenance margin, the exchange closes the position for you. That is liquidation. On Cryptathon the mark price is used for liquidation, take-profit and stop-loss triggers, and funding payments, so it is the mark price that moves your equity towards that line.

Worked example

How far can BTC fall?

You hold the 2,000 USDT BTC long at 10x, with 200 USDT of margin. About how far can BTC fall before equity reaches the maintenance margin?

  1. 1
    Find maintenance margin at entryIt changes with the mark price.
    2,000 × 0.5% = 10 USDT
  2. 2
    Find the loss the margin can takeUsing maintenance margin at entry gives an approximate loss allowance.
    200 − 10 = 190 USDT
  3. 3
    Read it as a price moveCompare the loss with the position size.
    190 ÷ 2,000 = 9.5%
  4. 4
    Check a smaller fallAfter a 5% fall the loss is 100 USDT, and equity is still well above 10.
    200 − 100 = 100 USDT

AnswerAbout 9.5%. Maintenance margin changes with the mark price, so the exact liquidation price is a little different. Treat it as a rule of thumb.

Equity at three prices: 2,000 USDT at 10x200BTC 0%Equity 200Maintenance 10−100100BTC −5%Equity 100Maintenance 9.50−190BTC −9.5%Equity 10Maintenance 9.05Maintenance
Equity at three prices2,000 USDT at 10xMaintenance line200BTC 0%Equity 200Maintenance10−100100BTC −5%Equity 100Maintenance9.50−190BTC −9.5%Equity 10Maintenance9.05
Figure 3 Equity is 200 USDT at entry, 100 after a 5% fall and 10 after a 9.5% fall. At the last price, maintenance margin is 9.05 USDT, so the position is close to liquidation.
Your turn You hold a 1,000 USDT ETH long at 20x. ETH falls 3%. What is the position's equity?
  1. 50 USDT

    That is the margin before the loss. Equity includes the unrealised PnL.

  2. 20 USDT

    Right. 1,000 ÷ 20 = 50 USDT of margin, the loss is 1,000 × 3% = 30 USDT, and 50 − 30 = 20.

  3. 48.50 USDT

    That takes 3% of the margin. The fall counts on the 1,000 USDT position.

  4. 5 USDT

    That is 0.5% of 1,000, about the maintenance margin. Equity is still above it.

Show the answer

B: 20 USDT. 1,000 ÷ 20 = 50 USDT of margin, the loss is 1,000 × 3% = 30 USDT, and 50 − 30 = 20.

Common questions

What is the difference between isolated and cross margin?

With isolated margin, each position has its own margin, and a loss can use only that margin. With cross margin, all positions share one pool, so a loss on one position can use money that holds up the others. Cryptathon uses isolated margin. If you have two positions with 100 USDT of margin each, one can be liquidated while the other stays open. Isolated and cross margin shows both with numbers.

Does your margin grow when the price moves your way?

Price moves do not change the locked margin, but the position's equity grows. Equity is margin plus unrealised PnL. A 2,000 USDT long at 10x has 200 USDT of margin. After a 2% rise, the PnL is 40 USDT and equity is 240 USDT. When you close, the 200 USDT of margin and the 40 USDT of PnL go back to your free balance, less the fee.

What is the smallest position you can open?

On Cryptathon the smallest position value is 10 USDT, and the order must also fit the market's lot size. BTC orders use steps of 0.001 BTC. At 100,000 USDT per BTC, one step is worth 100 USDT. That position needs 10 USDT of margin at 10x, plus the trading fee, which comes from your free balance, on top of the margin.

Check yourself

Three questions on the whole lesson.

Question 1 of 3 You open a 600 USDT SOL position at 3x. What is the initial margin?
  1. 1,800 USDT

    That multiplies. Initial margin is the position size divided by the leverage.

  2. 200 USDT

    Right. 600 ÷ 3 = 200 USDT.

  3. 600 USDT

    That is the whole position. At 3x you lock a third of it.

  4. 3 USDT

    That is 0.5% of 600, the maintenance margin.

Show the answer

B: 200 USDT. 600 ÷ 3 = 200 USDT.

Question 2 of 3 What is the maintenance margin on a 4,000 USDT position?
  1. 400 USDT

    That is 10% of the position, the initial margin at 10x.

  2. 20 USDT

    Right. 4,000 × 0.5% = 20 USDT.

  3. 2 USDT

    That uses 0.05%, the taker fee rate.

  4. 200 USDT

    That uses 5%. 0.5% is 0.005.

Show the answer

B: 20 USDT. 4,000 × 0.5% = 20 USDT.

Question 3 of 3 A position has 300 USDT of margin and an unrealised PnL of −120 USDT. What is its equity?
  1. 180 USDT

    Right. 300 − 120 = 180 USDT.

  2. 300 USDT

    That is the margin only. Equity includes the unrealised PnL.

  3. 420 USDT

    That adds the loss as if it were a gain.

  4. 120 USDT

    That is the size of the loss, not what is left.

Show the answer

A: 180 USDT. 300 − 120 = 180 USDT.

What to remember

  1. How much margin do you need to open a position?Initial margin is the position size divided by the leverage, and the fee comes on top.
  2. How is margin different from free balance?Margin is locked in one position, free balance is the rest, and isolated margin keeps a loss inside its own position.
  3. What is maintenance margin?Equity is margin plus unrealised PnL, and the position is liquidated when equity falls to the maintenance margin.
Next lessonIsolated and cross margin