87 lines
3.1 KiB
Markdown
87 lines
3.1 KiB
Markdown
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> ## Documentation Index
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> Fetch the complete documentation index at: https://docs.polymarket.com/llms.txt
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> Use this file to discover all available pages before exploring further.
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# Margin
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> Initial margin, maintenance margin, and equity calculations
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Margin is the collateral required to open and maintain leveraged positions. It
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ensures traders have enough collateral to cover potential losses and gives the
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system a buffer to close positions before they become insolvent.
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There are two thresholds. **Initial margin (IM)** is the collateral required to
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open or increase a position. **Maintenance margin (MM)** is the minimum
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collateral required to keep a position open. When equity drops below maintenance
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margin, the position is [liquidated](/perps/learn-about-trading/liquidation-mechanics).
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## Equity
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Equity is the real-time value of an account, incorporating all open positions at
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current Mark Price.
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```text theme={null}
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Equity = Collateral + UnrealizedPnL(Mark) - FeesDue - FundingDue
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```
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### Unrealized PnL
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```text theme={null}
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Long PnL = PositionSize * (Mark - EntryPrice)
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Short PnL = PositionSize * (EntryPrice - Mark)
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```
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Because equity depends on Mark Price, equity follows live mark updates. See
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[Mark Price](/perps/learn-about-trading/mark-price).
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## Margin Requirements
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```text theme={null}
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IM = Notional / L_max
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MM = Notional / L_maint
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```
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Margin requirements scale with position size through leverage tiers. Larger
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positions require proportionally more margin. Margin is calculated incrementally
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across tiers, so a position spanning two tiers uses the lower tier's rate on
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notional up to its upper bound and the next tier's rate on the remainder.
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Margin requirements are static across sessions.
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## Margin States
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An account is always in one of three states.
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| State | Condition | What Happens |
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| ----------- | ------------------- | ---------------------------------------------- |
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| Healthy | `Equity >= IM` | Normal trading |
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| Margin call | `MM <= Equity < IM` | Can only reduce exposure or deposit collateral |
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| Liquidation | `Equity < MM` | The system begins closing the position |
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## Margin Checks
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### Pre-Trade
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Before any order executes, the system verifies the account can afford it:
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1. Compute the new position after the order fills.
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2. Calculate required initial margin using the market's leverage tiers.
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3. Reject the order if equity is below required initial margin.
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This prevents accounts from entering a margin-call state through new trades.
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### Continuous Monitoring
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The system continuously evaluates accounts:
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* If equity falls below maintenance margin, liquidation begins.
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* If equity is between maintenance margin and initial margin, the account may enter reduce-only mode.
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## Deposits and Withdrawals
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Deposits increase equity. A deposit during margin call can restore the account to
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healthy status immediately.
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Withdrawals require the account to remain above required initial margin after the
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withdrawal. You cannot withdraw yourself into a margin call.
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