Leverage and Margin

 

Initial & Maintenance Margin

Initial margin refers to the margin required to open a position, determined by the position size and leverage. The Maintenance margin refers to the minimum amount required for holding a leveraged position and determines the specific price triggering position liquidation.

 

Initial Margin (IM)

  • Buy/Long order IM requirement: [Contract value*Min (Buy/Long limit order price, best ask price)]/Leverage. Order will reserve a two-way (fee to open + fee to close) taker fee of 0.075%. Actual trading fees will be calculated based on the nature of the order and the execution price.

  • Sell/Short order IM requirement: [Contract value*Max (Sell/Short limit order, best bid price)]/Leverage. Order will reserve a two-way (fee to open + fee to close) taker fee of 0.075%. Actual trading fees will be calculated based on the nature of the order and the execution price.

  • If an order does not increase the size of the existing position, no IM will be posted.

  • If a trader has a concurrent Buy and Sell position/order, the system will take Max [Buy order IM (X), Sell order IM (Y)] as the account IM. Assuming X=200, Y=150, then the account IM will be 200. If the trader places another sell order with order cost less than 50, no extra margin is required. However, if the additional sell order cost is 70, causing Y=220, then it will require additional 20 (220-200) margin to place the additional sell order.

Maintenance Margin (MM)

  • Maintenance Margin(MM) is calculated using the maintenance margin rate (MMR). The MM for each contract varies as it will increase as a result of the increase in the risk limit.

  • For all positions, the required maintenance margin is MMR * Contract Value. The taker fee for closing the position will also be included in the maintenance margin requirement. This is the minimum margin required to continue holding a position. Thus, if the margin available in the position is less than the maintenance margin, the position will be liquidated.

 

 

 

Isolated Margin & Cross Margin

 

Traders can choose to use either cross margin or isolated margin mode on Bybit.

 

Cross Margin

All available margin of the respective asset type can be drawn to prevent liquidation.

 

Isolated Margin

The maximum loss for a position under isolated margin mode is limited to the initial margin and extra margin (if any).

If the position gets liquidated, no extra margin will be drawn to the position.

Traders may manually append extra margin to an isolated position, which reduces the effective leverage, resulting in a better liquidation price.

Once position leverage is adjusted, all the extra margin posted previously will be reset to 0.

 

Setting & Adjusting Isolated Margin

Cross margin mode is enabled by default.

Traders can switch to isolated margin mode and set a desired leverage.

The higher the leverage, the lower the margin required for this position.

 

 

 

Liquidation

 

Liquidation Process

Bybit uses fair price marking to avoid liquidation caused by low liquidity or market manipulation.
To open a larger position, traders may raise the risk limit to a higher tier. A higher risk limit requires higher margin.
When liquidation happens, Bybit uses partial liquidation to reduce the required maintenance margin to avoid full liquidation.

The process of liquidation is as follows.

 

Traders under the lowest risk limit

  • All active orders of this contract will be canceled;

  • If it still doesn’t meet the maintenance margin requirement, that position will be closed at the bankruptcy price by the liquidation engine.

Traders under second or higher risk limit

The liquidation engine will try to lower the risk limit level of the trader to lower the margin requirement:

  • Maintain the current position and active orders unchanged,and reduce the risk limit of the trader directly if possible;

  • Cancel all active orders while retaining the existing position to reduce the risk limit;

  • Submit a FillOrKill order of the difference between the current position value and the risk limit value which satisfies the margin requirement, thus preventing further liquidation;

  • If the position is still in liquidation, all positions shall be taken over by the liquidation engine at the bankruptcy price.