What Is Margin in Crypto Trading?
Margin is the collateral a trader deposits with a trading platform to open and maintain a leveraged position. It acts as the downpayment on the trade — and as the buffer that
absorbs losses before the position is liquidated.
In perpetual futures trading, margin is the foundation of every leveraged position. The amount of margin, combined with the chosen leverage multiplier, determines the total position
size, the liquidation price, and the trader's maximum possible loss.
How Does Margin Work?
The trader deposits margin into their trading account or self-custody wallet.
They choose a leverage ratio (e.g., 5x, 20x, 100x).
The platform allows them to open a position equal to the margin × leverage.
As the market moves, profits are added to the margin and losses are deducted.
If the margin falls below the maintenance margin threshold, the position is liquidated.
Types of Margin
Initial Margin
The minimum collateral required to open a new position. It is a percentage of the total position size — higher leverage means lower initial margin.
Maintenance Margin
The minimum collateral required to keep a position open. Once margin falls below this, the platform triggers liquidation.
Isolated Margin
Margin allocated to a single position only. If the position is liquidated, only that allocated margin is lost — the rest of the wallet is safe.
Cross Margin
Margin shared across all open positions. The entire account balance acts as collateral, allowing positions to absorb more losses but exposing the whole balance to liquidation risk.
Margin Requirements by Leverage
| Leverage | Initial Margin | Example Position per $100 |
|---|---|---|
| 2x | 50% | $200 |
| 5x | 20% | $500 |
| 10x | 10% | $1,000 |
| 25x | 4% | $2,500 |
| 50x | 2% | $5,000 |
| 100x | 1% | $10,000 |
| 200x | 0.5% | $20,000 |
Isolated vs Cross Margin
| Feature | Isolated Margin | Cross Margin |
|---|---|---|
| Collateral at risk | Only allocated margin | Entire account balance |
| Liquidation scope | Single position | Can cascade across positions |
| Best for | Speculative or high-risk positions | Hedging or portfolio strategies |
| Capital efficiency | Lower | Higher |
Common Margin Strategies
Top up margin — add more collateral to push the liquidation price further away
Reduce leverage — give the position more room to move
Use isolated margin for speculation — contain liquidation risk to a single trade
Use cross margin for hedged portfolios — let gains on one position offset losses on another
Margin and Trust Wallet
When trading perpetual futures through Hyperliquid or Aster DEX via Trust Wallet, margin is posted directly from the user's self-custody wallet. Users choose between cross and isolated margin modes and set their own leverage — all while keeping full control of their private keys.
