Initial vs maintenance margin, cross vs isolated with side-by-side worked examples, what your margin ratio really tells you, and how adding margin pushes the liquidation price away. The collateral concepts every leveraged trader has to get right.
Ready to put this into practice?Trade on Bybit — deep liquidity, low fees, up to a $30,000 welcome bonus.Open Bybit account →Margin is the collateral you post to back a leveraged position. When you open a futures trade, you don't pay for the whole position — you set aside a fraction of its value as a good-faith deposit, and the exchange effectively lends you the rest. That deposit is your margin, and it is the money genuinely at risk.
The key pair of numbers is notional vs margin. Notional is the full size of the position — price × quantity, the amount whose price movements you're exposed to. Margin is the slice of that notional you actually funded. If you open a $10,000 position at 10x leverage, the notional is $10,000 but your margin is just $1,000. Your profit and loss are computed on the $10,000 notional, then land in your $1,000 of margin — which is exactly why leverage magnifies percentage swings. Understanding that margin is a small cushion under a much larger exposure is the foundation for everything below.
Exchanges enforce two distinct margin thresholds, and confusing them is a common way people get surprised by a liquidation.
Initial margin is what you need to open the position. It's set by your leverage: at 10x it's 10% of notional, at 25x it's 4%, at 50x it's 2%. Choose more leverage and you post less initial margin for the same notional — but you also leave a thinner cushion.
Maintenance margin is the smaller minimum you must keep to stay open. It's typically around 0.5% of notional for liquid pairs (higher for large or illiquid positions on tiered schedules). As long as your position's equity — margin plus or minus unrealized PnL — stays above the maintenance requirement, the trade lives. The moment your equity is eroded down to that maintenance level, the exchange liquidates you: it force-closes the position and takes what remains of your margin to cover the loss. Maintenance margin is, in effect, the trip-wire that defines your liquidation price.
| Leverage | Initial margin | Maintenance (typical) | Loss buffer before liquidation |
|---|---|---|---|
| 2x | 50% | ~0.5% | ~49.5% of notional |
| 5x | 20% | ~0.5% | ~19.5% |
| 10x | 10% | ~0.5% | ~9.5% |
| 25x | 4% | ~0.5% | ~3.5% |
| 50x | 2% | ~0.5% | ~1.5% |
The gap between your initial and maintenance margin is the room price has to move against you before you're closed. Higher leverage shrinks it toward zero.
Every position runs in one of two margin modes, and they behave very differently when a trade goes wrong.
Isolated margin: only the margin you assigned to that specific trade backs it. If the position is liquidated, you lose exactly that assigned amount and not a cent more — the position dies alone and the rest of your balance is untouched. Losses are capped and predictable, which is why isolated is the safer default.
Cross margin: your entire available balance backs the position. That extra collateral is automatically drawn on to hold the trade open, so it's much harder to liquidate — but if price keeps running against you, a single bad trade can drain your whole account instead of one bounded stake.
You have $1,000 in your account. You open a $5,000 long on ETH at 5x, posting $1,000 of margin. The trade goes badly and ETH falls ~20%.
Same entry, same leverage — the mode alone decided whether the worst case was "lose one stake" or "lose the account." Beginners should almost always start isolated.
Cross vs isolated calc →The single number that tells you how much danger a position is in is the margin ratio: your maintenance margin divided by your current equity (margin ± unrealized PnL), shown as a percentage. A low ratio means you're comfortable; as it climbs toward 100%, your equity is approaching the maintenance floor and liquidation is imminent.
Reading it is simple: a rising margin ratio is a live warning. If it's creeping past 60–70% you have essentially two choices — reduce the position (close part of it to cut the maintenance requirement) or add margin. Watch this number, not just the raw PnL, because it accounts for both your loss and how thin your cushion has become.
On an isolated position you can add margin at any time. Doing so increases the collateral cushioning the trade, so price has to travel further before your equity reaches maintenance — the liquidation price moves away from your entry and your margin ratio drops. It's the most direct way to give a position that's under pressure more room to breathe without closing it.
Two honest caveats. First, adding margin does not fix a bad trade — it just moves the wall back and puts more of your money behind a position that's already losing, so use it deliberately, not reflexively. Second, it only changes distance-to-liquidation; your entry price and take-profit are unchanged. Model the exact new liquidation price before you commit the extra collateral.
Add-margin calc →Liquidation calc →Initial margin is the collateral required to open a position — for example, 10% of notional at 10x leverage. Maintenance margin is the smaller minimum you must keep to hold it open, often around 0.5% of notional. When your equity falls to the maintenance level, the exchange liquidates the position.
Isolated margin is safer for beginners because only the collateral assigned to that trade is at risk — a single bad position dies alone and cannot drain the rest of your account. Cross margin uses your whole balance to back the position, which delays liquidation but can wipe out everything if the trade keeps going against you.
Adding margin to an isolated position increases the collateral cushioning it, so price has to travel further before your equity hits the maintenance level. This pushes the liquidation price away from your entry and lowers your margin ratio, giving the trade more room. It does not change your entry price or your profit target.
⚠️ Educational only — not financial advice. Leverage trading can lose your entire deposit.