Margin Trading Glossary
Essential terms every margin trader should understand. Click any term for a detailed explanation with examples.
B
Buying Power
The total value of positions you can open based on your available margin and leverage, representing your maximum trading capacity.
Basis (Futures Premium/Discount)
The difference between the futures contract price and the spot price of the underlying asset, representing the cost of carry or market sentiment.
F
I
Isolated Margin
A margin mode where each position has its own dedicated collateral, limiting potential losses to only the margin assigned to that specific trade.
Initial Margin
The minimum amount of collateral required to open a new leveraged trading position.
Insurance Fund
A reserve fund maintained by a crypto exchange to cover losses when liquidated positions cannot be closed at the bankruptcy price.
L
Liquidation
The forced closure of a leveraged trading position by the exchange when the trader's margin falls below the maintenance requirement.
Leverage
A trading mechanism that allows you to control a larger position than your actual capital by borrowing funds, expressed as a ratio like 10x or 100x.
Long Position
A trading position that profits when the price of the asset increases. Going long means buying with the expectation that the price will rise.
M
Margin Call
A demand from a broker to deposit additional funds when your account equity falls below the required maintenance margin level.
Maintenance Margin
The minimum amount of equity you must maintain in your margin account to keep positions open and avoid liquidation.
Mark Price
A fair price calculation used by exchanges to prevent unfair liquidations, typically based on spot price index and funding rate.
Margin Requirement
The minimum amount of funds that must be deposited as collateral to open or maintain a leveraged trading position.
Maintenance Margin Ratio
The percentage of position value that must be maintained as equity to avoid liquidation, expressed as a ratio.
P
Portfolio Margin
An advanced margin methodology that calculates requirements based on the overall risk of a portfolio rather than individual positions, offering greater capital efficiency.
Perpetual Contract
A type of futures contract with no expiration date that tracks the price of an underlying asset through a funding rate mechanism.