MEXC Margin Calculation Guide: Initial Margin, Maintenance Margin, and Liquidation Price Explained
In MEXC Futures trading, margin is a core concept that every trader must understand. Whether you are new to Futures trading or an experienced user looking to better understand margin calculations, this guide explains MEXC's margin formulas, liquidation mechanism, and how to manage position risk effectively.
1. Position Value: The Basis of Margin Calculation
Position value is the fundamental data used to calculate all margin requirements. In MEXC Futures trading, opening any position requires margin, and the position value determines how much capital is needed.
- USDT-margined position value = Fill price × Contract size × Position size
- Coin-margined position value = Position size × Contract value / Price
Example:
Suppose you buy 100 BTCUSDT perpetual contracts at a price of 50,000 USDT, each with a contract size of 0.0001 BTC.
Position value = 50,000 × 0.0001 × 100 = 500 USDT
2. Initial Margin: Funds Required to Open a Position
Initial margin is the minimum amount of funds required to open a position. The initial margin rate directly reflects the leverage you use. The higher the leverage, the lower the required initial margin.
- Initial margin rate = Position margin / Position value
- USDT-margined initial margin = Average fill price × Position size × Contract size / Leverage
- Coin-margined initial margin = Position size × Contract value / (Average fill price × Leverage)
Example:
You open a BTCUSDT position at 50,000 USDT, with a position value of 500 USDT, using 10× leverage.
Initial margin = 500 / 10 = 50 USDT
This means you only need to commit 50 USDT to control a position worth 500 USDT.
3. Maintenance Margin: Minimum Requirement to Avoid Liquidation
Maintenance margin is the minimum amount of margin required to keep a position open.
If your account margin falls below the maintenance margin level, liquidation or partial liquidation will be triggered.
- USDT-margined maintenance margin = Average fill price × Position size × Contract size × Maintenance margin rate
- Coin-margined maintenance margin = Contract value × Position size / Average fill price × Maintenance margin rate
Example
Suppose your position value is 500 USDT, and the maintenance margin rate is 0.5%.
Maintenance margin = 500 × 0.5% = 2.5 USDT
As long as your position margin plus unrealized PNL remains above 2.5 USDT, the position can be maintained.
4. Margin Rate: Key Indicator of Position Risk
Margin rate is the key metric used to measure position risk.
The lower the margin rate, the lower the risk. When the margin rate reaches 100%, the position will be liquidated.
Margin rate = (Maintenance margin + Liquidation fee) / (Position margin + Unrealized PNL)
Example
Your maintenance margin is 2.5 USDT, liquidation fee is 0.5 USDT, position margin is 50 USDT, and current unrealized loss is 20 USDT (unrealized PNL = −20).
Margin rate = (2.5 + 0.5) / (50 − 20) = 3 / 30 = 10%, indicating low risk.
If the unrealized loss increases to 47 USDT, margin rate = 3 / 3 = 100%, and liquidation will be triggered.
5. Opening Cost: Total Funds Frozen When Opening a Position
Opening cost is the total amount of assets that must be frozen when opening a position. It includes the initial margin and any applicable trading fees.
The fee depends on whether your order is executed as a Maker (limit order) or Taker (market order).
- Opening cost = Initial margin + Estimated fee (depends on Maker / Taker execution)
- USDT-margined Futures: Order cost = Average fill price × Order quantity × Contract size / Leverage
- Coin-margined Futures: Order cost = Order quantity × Contract value / (Leverage × Average fill price)
Example:
You open a position with a value of 500 USDT using 10× leverage, and the taker fee rate is 0.02%.
Initial margin = 50 USDT
Estimated fee = 500 × 0.02% = 0.1 USDT
Opening cost = 50 + 0.1 = 50.1 USDT
6. Position Margin: Key Data for Liquidation Decisions
Position margin is a key factor the system uses to determine whether liquidation will be triggered.
When position margin plus unrealized PNL falls below the maintenance margin, liquidation will occur.
Position margin = Average fill price × Position size × Contract size / Leverage
7. Liquidation Price in Isolated Margin Mode: Precise Calculation of the Liquidation Level
In isolated margin mode, the margin of each position is independent. If the margin of a specific position plus its unrealized PNL falls below the maintenance margin, that position will be liquidated.
- Liquidation condition: Position margin + Unrealized PNL ≤ Maintenance margin
- Long position liquidation price = (Maintenance margin − Position margin + Average fill price × Position size × Contract size) / (Quantity × Contract size)
- Short position liquidation price = (Average fill price × Position size × Contract size − Maintenance margin + Position margin) / (Quantity × Contract size)
Example
You open a BTC long position at 50,000 USDT, with a position value of 500 USDT, using 10× leverage (position margin = 50 USDT).
Maintenance margin = 2.5 USDT
Quantity × Contract size = 0.01 BTC
Long liquidation price = (2.5 − 50 + 500) / 0.01 = 452.5 / 0.01 = 45,250 USDT
This means your long position will be liquidated if BTC falls to approximately 45,250 USDT.
8. Cross Margin Mode: Margin Calculation and Differences from Isolated Mode
In cross margin mode, the system uses all available margins in your account as position margins to reduce the risk of liquidation. However, if one position incurs losses and reduces the available balance, those funds are not immediately reallocated as margin for other cross-margin positions.
Key characteristics of cross margin mode:
- All available funds share the risk across positions
- Suitable for traders with strong confidence in their market outlook
- If liquidation occurs, losses may affect all available funds in the account
9. Auto-Margin Addition: The Last Line of Defense for Your Position
The auto-margin addition feature automatically transfers funds from your available balance to your position margin when the position approaches liquidation. This helps protect your position and avoid forced liquidation. It serves as the final line of defense for maintaining a position.
- USDT-margined Futures: Margin added per addition = Average fill price × Contract size × Position size × Maintenance margin rate
- Coin-margined Futures: Margin added per addition = Contract value × Position size × Maintenance margin rate / Average fill price
Example:
You hold a BTCUSDT long position with an average fill price of 50,000 USDT, a position value of 500 USDT, and a maintenance margin rate of 0.5%. When auto-margin addition is triggered, the system adds 500 × 0.5% = 2.5 USDT each time.
10. Margin FAQs
10.1 What happens if the margin is insufficient?
When your position margin plus unrealized PNL falls below the maintenance margin requirement, the system will trigger forced liquidation. In isolated margin mode, only that position is liquidated. In cross-margin mode, liquidation may affect all positions.
Example:
You open a long position with a 50 USDT margin, and the maintenance margin is 2.5 USDT. If market losses reach 47.5 USDT, then:
- Position margin + Unrealized PNL = 50 − 47.5 = 2.5 USDT
This equals the maintenance margin, and liquidation is triggered.
10.2 How can I reduce margin rate and lower liquidation risk?
You can reduce risk by:
- Manually adding margin
- Reducing leverage
- Partially closing the position to reduce size
- Enabling auto-margin addition
Example
If your margin rate is 80% (close to liquidation), adding 20 USDT margin may reduce the margin rate to about 50%, significantly lowering liquidation risk.
10.3 How do I choose between isolated margin and cross margin?
Isolated margin mode is suitable for traders who want to isolate risk. Each position is calculated independently, and liquidation of one position does not affect others.
Cross margin mode is suitable for traders who want stronger risk resistance. All available funds share risk across positions, but losses can be larger if liquidation occurs.
Example
Your account has 1,000 USDT, and you open two positions (A and B), each using a 100 USDT margin.
- In isolated margin mode, if position A is liquidated, the maximum loss is 100 USDT. Position B and the remaining 800 USDT are unaffected.
- In cross margin mode, if position A continues to lose, the system may use the remaining 800 USDT to maintain the position. In extreme cases, the entire 1,000 USDT may be lost.
10.4 Can margin be withdrawn at any time?
Available margin that is not being used by positions can be withdrawn at any time. Position margin currently in use can only be released after the position is closed.
Example
Your account balance is 500 USDT, of which 100 USDT is used as position margin and 400 USDT is available balance. You can withdraw up to 400 USDT. The remaining 100 USDT can only be withdrawn after the position is closed.