Maintenance margin is the minimum balance you must maintain for an open position. If your margin balance drops below this level, the BitMEX Liquidation Engine automatically liquidates your position. Maintenance margin acts as a risk management mechanism that protects your account from deeper losses.
Maintenance margin is always lower than the initial margin required to open the position. You need more collateral to enter a trade than you need to keep it open. This gap between initial margin and maintenance margin provides a buffer zone where unrealised losses can be absorbed without triggering immediate liquidation.
How Does Maintenance Margin Trigger Liquidation?
The Liquidation Engine monitors your margin balance against the maintenance margin threshold in real time. When the margin balance falls to or below the maintenance margin level, liquidation is triggered automatically.
The process works as follows:
- You open a position with initial margin as collateral.
- The market moves against your position, generating unrealised losses.
- Unrealised losses reduce your position margin (under isolated margin) or margin balance (under cross margin).
- When the remaining margin reaches the maintenance margin level, the Liquidation Engine steps in.
- The position is closed at the bankruptcy price.
Under cross margin, all cross margin positions are liquidated simultaneously. Under isolated margin, only the affected position is liquidated.
Why Does Maintenance Margin Matter for Risk Management?
Maintenance margin defines the exact point at which you lose your position. Understanding this threshold allows you to manage risk proactively rather than reactively.
By monitoring how close your margin is to the maintenance level, you can take action before liquidation occurs. This includes adding more margin to the position, reducing position size, or closing the trade entirely.
On BitMEX, the estimated liquidation price displayed on the trading interface is calculated based on the maintenance margin requirement. As your position changes in value or as you adjust leverage, the liquidation price updates in real time. Checking this value before and during trades is essential for effective risk management.