What is margin trading in perpetual future trading?
$CYBER In perpetual futures trading, margin trading means you’re trading with borrowed funds instead of just the money you deposit.
Here’s the breakdown:
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1. The Basics
You deposit a certain amount of money called margin into your trading account.
This margin acts as collateral for opening a leveraged position.
The exchange lends you the rest of the capital needed for your trade.
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2. Types of Margin
1. Initial Margin – the minimum amount you need to open a position.
Example: If you want to open a $1,000 position with 10× leverage, you only need $100 initial margin.
2. Maintenance Margin – the minimum balance you must keep in your account to avoid liquidation.
If your losses push your equity below this level, your position is automatically closed.
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3. How Leverage Works
Leverage multiplies your buying or selling power.
Example:
5× leverage → $100 margin controls $500 worth of contracts.
20× leverage → $100 margin controls $2,000 worth of contracts.
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4. Why It’s Used
Higher potential profits from smaller capital.
Ability to short sell (profit from price going down).
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5. The Risks
Losses are also multiplied.
If the market moves against you, your margin can be wiped out fast.
Liquidation happens if your account equity drops below the maintenance margin.
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💡 Key point: In perpetual futures, margin trading is always part of the process — even if you use 1× leverage — because you’re trading contracts based on collateral, not directly buying the asset.
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