When you use cross margin, your total account balance serves as collateral, but only a portion is used as margin at any given time. The system automatically adds margin when the maintenance margin requirement is breached and releases margin as the position becomes profitable. Position margin can also change through manual adjustments and funding payments.
How Does Cross Margin Allocation Work?
Once the initial margin is set, the system manages the position’s margin automatically through two mechanisms:
- Margin is added in increments equal to the unrealised loss each time the maintenance margin requirement is breached. This draws from your available balance to keep the position open.
- Margin is released from the position as it becomes profitable. This returns funds to your available balance.
This dynamic allocation means your position margin fluctuates with market movements. The system continuously adjusts to keep positions open whilst preserving available funds where possible.
What Else Causes Position Margin to Change?
Beyond the automatic adjustments driven by unrealised profit and loss, two additional factors can change your position margin.
Manual adjustments. You can manually add or remove margin from a cross margin position. Adding margin increases the buffer before liquidation. Removing margin frees up funds but brings the liquidation price closer.
Funding payments. On perpetual contracts, funding payments are exchanged between longs and shorts at regular intervals. These payments affect your position margin directly. If you receive a funding payment, your position margin increases. If you pay funding, your position margin decreases.
Both manual adjustments and funding payments change the effective margin allocated to your position, which in turn affects your liquidation price and available balance.