Margin, leverage and liquidation

How margin and leverage work in futures, what liquidation is, how margin modes differ, and how to keep your risk under control.

Margin is the money you put up to open a futures position, and leverage lets that position be bigger than your margin. If the market moves against you and your margin can no longer cover the loss, the position is liquidated, meaning closed automatically, and you can lose that margin.

Risk warning: leveraged trading can lose money very quickly. Never trade with money you can't afford to lose. Read the Risk disclosure before you start.

Margin and leverage

Leverage multiplies your exposure. Example only, made-up figures: 100 USDT of margin at 10x opens a position worth 1,000 USDT. A 5% move in your favor gains about 50 USDT, half your margin. A 5% move against you loses about the same. The higher the leverage, the smaller the move it takes to wipe out your margin.

With Coin-M contracts, your margin is the coin itself, so a falling coin price can shrink your margin's value at the same time as it moves your position.

What liquidation is

A leveraged position needs a minimum amount of margin to stay open. When losses eat your margin down to that level, the position is closed automatically to stop the losses growing, and you can lose some or all of the margin behind it.

How close you are depends on your leverage, your position size and the margin you've put up. Many futures platforms show an estimated liquidation price for open positions; if you see one, watch it, especially in fast markets.

Margin modes

Futures platforms commonly assign margin in one of two ways:

  • Isolated margin: each position has its own margin. If it's liquidated, you lose only that position's margin.
  • Cross margin: your available futures balance backs all your positions. That gives them more room, but a big loss can draw on your whole balance.

Check the margin settings in the Futures order form before you open a position.

Multi-asset mode and unified trading account

Trade Llama doesn't offer a multi-asset margin mode or a unified trading account. Your funds are held in separate accounts, and you move them with Transfer in Wallet. See Transfer between your accounts.

Fees, limits and rules

Each order's estimated fee is shown in the order form before you place it, and the full schedule is on the Fees page. Check the order form for the contract you're trading, and see the Terms of Service for the rules that apply to your account.

Manage your risk

  • Start with low leverage, especially while you're learning.
  • Decide before you enter where you'll take a profit and where you'll cut a loss.
  • If isolated margin is available, use it to cap what one position can lose.
  • Don't keep adding margin to a losing position just to avoid liquidation.
  • Watch your positions closely in fast markets and around major news.

Next steps

New to futures? Start with Get started with futures.