# Margin calculations

#### Margin definitions <a href="#margin-definitions" id="margin-definitions"></a>

* **Initial Margin (IM):** collateral required to open a position.
* **Maintenance Margin (MM):** minimum collateral to keep a position open; falling below triggers liquidation.

<figure><img src="/files/v6PJCffxn8xnDLl2r5qZ" alt="" width="318"><figcaption></figcaption></figure>

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) <a href="#approximate-liquidation-prices-isolated-formula-intuition" id="approximate-liquidation-prices-isolated-formula-intuition"></a>

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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