> For the complete documentation index, see [llms.txt](https://learn.trovemarkets.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://learn.trovemarkets.com/risk/margin-calculations.md).
# Margin calculations
IM, MM and liquidation formula
#### Margin definitions
* **Initial Margin (IM):** collateral required to open a position.
* **Maintenance Margin (MM):** minimum collateral to keep a position open; falling below triggers liquidation.
Let **IMR = 1 / MaxLeverage** and **MMR** be the maintenance margin ratio (displayed in the UI; subject to change per market).
***
### Approximate liquidation prices (isolated-formula intuition)
Ignoring fees/funding for intuition, for a position opened at price P*e*:
**Long liquidation (approx.):**
$$
P\_{\text{liq,long}} \approx \frac{P\_e - \frac{M}{q}}{1 - m}
$$
**Short liquidation (approx.):**
$$
P\_{\text{liq,short}} \approx \frac{P\_e + \frac{M}{q}}{1 + m}
$$
Where 𝑞 > 0 is quantity, 𝑀 is isolated margin, and m = 10% is the maintenance ratio
{% hint style="info" %}
These are simplified for intuition. Actual liquidation considers live mark, fees, funding accrual, and execution slippage.
{% endhint %}
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