When will your positions be liquidated? A guide to margin levels

In a portfolio margin account, the margin level is the key factor that determines if and when your open positions will be closed. Many traders( have a misconception here: they think liquidation only occurs at 0% margin level. This is a common misunderstanding.

The truth about margin level and liquidation

The reality is different: as soon as the margin level falls below 100%, your position will be partially or fully liquidated. This does not mean you have to wait until your account is completely wiped out. The system reacts much earlier.

Depending on the size of your position, a partial liquidation may occur first, instead of everything being closed at once. This is an important protective mechanism: if the partial liquidation does not restore the required margin level, further positions will be reduced until either the necessary ratio is reached or all open positions are closed.

Why this protective mechanism makes sense

This step-by-step approach to risk control aims to minimize the so-called market impact during the liquidation of large positions. This helps avoid extreme price movements that could harm all market participants.

Where to calculate your personal liquidation price

If you want to know at what price your specific position will be liquidated, you can use calculator tools on the derivatives trading platform. But note: if you have multiple open positions at the same time, the estimated liquidation price may differ from the actual liquidation price.

Margin calculation – different modes, different rules

The margin level is calculated differently depending on your chosen account mode. There are several variants:

• Single currency margin mode or cross-margin trading: Specific calculation rules apply for your margin level
• Multi-currency margin mode or cross-margin trading: A different calculation approach with various parameters
• Isolated margin mode: Both for single currency and multi-currency scenarios, there are specific guidelines

To fully understand how your margin level is calculated in your specific mode, you should familiarize yourself with the detailed guidelines for your account type. This way, you will be well prepared when it comes to your trading positions.

Important note: This article is for informational purposes only and does not constitute investment, financial, legal, or tax advice. Cryptocurrencies and digital assets carry significant risks, can be volatile, and may lose value. Carefully assess whether trading digital assets is suitable for your financial situation. For personal questions, consult your financial advisor.