Contents
The two numbers beginners mix upInitial margin: what gets locked when you openDoes the loss stop at your margin? Only in one modeMaintenance margin: the line you do not want to crossUsed margin, available margin and the margin ratio on screenCan you add margin to a trade that is already open?
The two numbers beginners mix up
Say bitcoin is trading at 50,000 USDT (an illustrative price) and you open a long on 0.01 BTC. The size of your trade is 0.01 × 50,000 = 500 USDT. That is the number every profit and loss is measured against: if the price moves 2%, your trade gains or loses 2% of 500, which is 10 USDT.
You do not need 500 USDT in your account to open that trade. At 10x leverage the exchange holds 500 ÷ 10 = 50 USDT from your balance as your deposit. That 50 USDT is your margin, and the formula is always the same: margin = trade size ÷ leverage. If you want the mechanics of the multiplier itself, that is covered on what leverage is and what 5x, 10x and 20x actually mean.
Initial margin: what gets locked when you open
The 50 USDT taken when you press Buy is called the initial margin. It does not leave your account and it is not a fee — it is simply frozen so you cannot spend it elsewhere while the position is alive. When you close the trade, it comes back, plus your profit or minus your loss, minus the fees the exchange charges on entry and exit.
Fees are charged on the trade size, not on the margin. On a 500 USDT trade a fee of a few hundredths of a percent costs you well under a dollar each way, so it is small — but it is taken from the same 50 USDT pot.
Does the loss stop at your margin? Only in one mode
Here is the part that catches most beginners. Your margin is the most you can lose on a trade only when that position is set to isolated margin and you have not switched on automatic margin top-ups. In isolated mode your 50 USDT is fenced off: if the price goes badly against you, the exchange closes the position, the 50 USDT is gone and the rest of your balance is untouched.
Cross margin works differently. There the free balance of your whole futures wallet stands behind the position, so a losing trade keeps drawing on money you never meant to put into it, and your other open trades are tied to the same pot. On Binance, new contracts open in cross margin by default, so this is not a setting to leave at whatever the app happens to show — look at it in the order window before you confirm, and read cross margin vs isolated margin if you are not sure which fits you.
Even in isolated mode, keep one thing in mind: in a fast, jumping market a position can close at a worse price than the numbers on screen suggested, so a small position and a stop-loss protect you better than the margin system alone. If you want the full picture of what the worst case looks like, see can you lose your whole deposit.
Maintenance margin: the line you do not want to cross
There is a second, much smaller number: the maintenance margin. It is the minimum amount the exchange insists stays behind your position. While your margin shrinks because the price is moving against you, nothing happens — until what is left drops to that minimum. At that point the exchange closes the trade for you. That is liquidation, and the money backing that position is gone.
In isolated mode, "what is left" means the margin you allocated to that one trade. In cross mode it means your whole free balance, which is why a cross position survives much longer and then takes much more with it. The maintenance margin itself depends on the contract and on how big your position is, so look it up in the contract specification in the app rather than assuming a number, and check the liquidation price the order window shows you before you confirm.
| The number | In our example | What it decides |
|---|---|---|
| Trade size | 0.01 BTC × 50,000 = 500 USDT | How much you gain or lose per 1% move |
| Initial margin | 500 ÷ 10 = 50 USDT | How much is locked from your balance when you open |
| Maintenance margin | a small share of 500 USDT, set by the contract | The level at which the exchange closes your trade |
Isolated long of 500.00 USDT, 10× leverage, maintenance margin 0.50% of position size (example). Simplified model without closing fees, risk-limit tiers or other positions — the exchange will show its own price.
Used margin, available margin and the margin ratio on screen
Open the futures screen and you will see your balance split up. Used margin is what your open positions are holding right now. Available margin is what is left to open new trades, and in cross mode it is also what absorbs losses. Next to your position there is usually a margin ratio — a percentage that creeps up as the trade moves against you and approaches the maintenance level.
The quickest way to make this concrete is to open a Binance Futures account, set up an order window and watch the margin number change as you move the leverage slider and switch between cross and isolated, before you put any money in. During sign-up the app will also tell you whether futures are available where you live.
Can you add margin to a trade that is already open?
Yes, on an isolated position there is an option to add margin. Move another 25 USDT behind that 500 USDT trade and your deposit becomes 75 USDT. Your trade size does not change, so your profit per 1% move stays exactly the same — but the price now has to travel further before the maintenance level is reached, so the liquidation price moves away from you. In cross mode you are not asked: the free balance is already doing that job automatically.
Adding margin is useful when you genuinely believe in the trade and you planned for it. It is dangerous as a reflex, because feeding money to a losing position is how small losses turn into large ones. The honest alternative is to open smaller in the first place — how to work out your position size walks through that, and how much you need to start shows what these numbers look like on a real beginner account.
Decide the loss before you decide the margin. Pick the amount you are willing to lose on a trade first, then choose a trade size, a leverage and a margin mode that keep that number true. The exchange works the margin out for you from the size and the leverage. Your job is to decide the loss you can live with and make sure nothing outside that trade can be pulled into it.
Is margin the same thing as leverage?
No. Leverage is the multiplier you choose; margin is the money that gets locked because of that choice. Pick 10x on a 500 USDT trade and the margin is 50 USDT; pick 5x on the same trade and it is 100 USDT. The trade behaves identically on the market — only the locked amount and the distance to liquidation change.
How is margin calculated on futures?
Margin = trade size ÷ leverage, where trade size = quantity × price. So 0.02 BTC at 50,000 USDT is 1,000 USDT of size, and at 20x that needs 50 USDT of margin. The order window shows the exact amount that will be locked — look at that number before you confirm.
What is the difference between initial margin and maintenance margin?
Initial margin is what is taken when you open the trade. Maintenance margin is the much smaller amount that must remain behind it. You lose the trade when losses eat the money backing it down to that maintenance level, not when they eat every last cent.
Do I get my margin back?
Yes, when you close the position the margin is released back to your available balance, adjusted for your profit or loss and the fees. If the trade was liquidated, the money that was backing it is gone, which is why the liquidation price is worth checking before you open.
Can I lose more than the margin on one trade?
In isolated margin, no — your risk on that position is the margin you allocated to it, as long as you have not turned on automatic margin top-ups. In cross margin, yes in the sense that the loss keeps drawing on your free balance and your other positions share the same pot. Keep positions small and use a stop-loss either way.
Which margin mode is set by default?
It depends on the exchange and the contract. On Binance, new contracts open in cross margin by default, so if you want the loss capped at one amount you have to switch that position to isolated yourself. Check the mode in the order window every time until it becomes a habit.