Leverage, initial margin, and maintenance margin
Leverage controls position notional relative to collateral. It amplifies gains, losses, fees, and funding exposure; it does not make the underlying market move more or less.
Three quantities to separate
Position notional is the market exposure, initial margin is the collateral required to open it, and maintenance margin is the minimum equity required to keep it open.
A 10× position can lose roughly ten percent of its notional before the posted initial margin is exhausted, but actual liquidation occurs earlier under venue rules and costs.
Isolated versus cross margin
Isolated margin confines the position to allocated collateral. Cross margin can use a wider account balance and may place more capital at risk.
The safer choice depends on portfolio structure and controls; neither mode eliminates liquidation risk.
Frequently asked questions
Does lower leverage guarantee no liquidation?⌄
No. It increases distance and collateral, but a sufficiently large move can still liquidate the position.
Do fees scale with margin?⌄
Trading fees generally scale with notional, so high leverage makes them large relative to posted margin.
Estimate liquidation risk →