What is the margin?

Trade margin

When buyers and sellers want to enter a Bitcoin derivatives position, to make sure they honor their contractual obligations, exchanges and trading platforms require them to deposit and maintain an account funded with Bitcoin as collateral: this is called the trade margin.

For a given trade margin and leverage, quantity and liquidation are automatically computed (trade margin = quantity / (price X leverage)).

On LN Markets, each trade margin is dedicated to a specific position. Hence, a trader can have different positions with a specific trade margin policy for each one.

Trade margin is expressed in sats (1 BTC = 100,000,000 satoshis or sats).

Maintenance margin

The maintenance margin represents the lowest required balance to keep your position or order active. It encompasses a reserve to cover the costs associated with opening and closing the position.

Margin

The margin is the total amount in sats to deposit in collateral to open a position.

The margin is equal to a trade margin plus a maintenance margin, which is the minimum amount to keep your position open (it includes closing fees).

When an order is executed (whether it’s an opening or closing order), the fees are subtracted from the maintenance margin. For market orders, this deduction occurs immediately upon placing the order, as the execution is instantaneous.