## 1. What is Margin?

Margin is a good-faith deposit, or an amount of capital one needs to post or deposit to hold position.

There are 2 margin modes available in OKEx: Cross Margin Mode and Fixed Margin Mode. For Cross Margin Mode, the Position Margin required varies with the price movements. For Fixed Margin mode, the Position Margin remains the same even the price fluctuates.

## 2. The relation between Margin required and Leverage.

Leverage allows traders to enter a position which is worth much more by committing only a little amount of money. The gain or loss is therefore, greatly magnified.

When a user opens a certain position, the required Initial Margin = Position Value / Leverage.

Example:

If the current BTC price is USD 10,000, and a user wants to open a 10x long position of perpetual swap that is worth 1 BTC, the Number of Swaps opened is 1 BTC x 10,000 USD/BTC / 100 USD = 100.

Initial Margin = Position Value / Leverage = Face Value x Number of Swaps / (Average Position Price x Leverage) = 100 USD x 100 / (10,000 USD/BTC x 10) = 0.1 BTC

## 3. Leverage, Initial Margin, Maintenance Margin, and Margin Ratio

Leverage: the leverage level chosen by the user when opening a position

Initial Margin Ratio: 1 / Leverage

Maintenance Margin Ratio: the lowest required margin ratio for maintaining the current open positions. When the Margin Ratio drops below the Maintenance Margin Ratio+ Forced-Liquidation Fee Rate, forced liquidation will be triggered.

Margin Ratio:

Fixed Margin Mode: Margin Ratio = (Fixed Margin + UPL) / Position Value

Cross Margin Mode: Margin Ratio = (Balance + RPL + UPL) / (Position Value + Withholding Margin of Working Orders x Leverage)

For example

Let the price of 1 BTC be USD 10,000, a user who selected Fixed Margin Mode opens a long position of 1 BTC. The Number of Swaps opened will be 100, and the Maintenance Margin Ratio will be 1% (tier 1)，Forced-Liquidation Fee Rate will be 0.075%.

Initial Margin = Face Value x Number of Swaps / (Average Position Price x Leverage) = 100 USD x 100 / (10,000 USD/BTC x 10) = 0.1 BTC

The Initial Margin Ratio for this position is 1 / 10 = 10%

When the price of 1 BTC falls to $9150, the UPL = Face Value x Number of Swaps / Average Position Price - Face Value x Number of Swaps / Latest Mark Price = 100 USD x 100 / 10,000 USD/BTC - 100 USD x 100 / 9,150 USD/BTC = -0.0929 BTC

Then the Margin Ratio = (Fixed Margin + UPL) / Average Position Price = (0.1 BTC - 0.0929 BTC) / (100 USD x 100 / 9150 USD/BTC) = 0.0071 / 1.0929 = 0.64%, which is smaller than the required Maintenance Margin Ratio + Forced-Liquidation Fee Rate(1.075%), so forced liquidation will be triggered.

## 4. Can I add margin manually?

Yes. However you may only do so in Fixed Margin Mode. Simply enter the amount of margin you would like to add for your positions to reduce liquidation risk.

## 5. Adjusting the Leverage of open positions

OKEx's perpetual swap allows Leverage level adjustment for open position. If a user who wants to increase the Leverage level, our system will check whether it has reached the tier's limit before allowing the adjustment. After the adjustment, the required maintenance margin will be lowered.