Suppose a trader incurs losses, and the margin becomes less than the minimum. In that case, they receives a margin call – a requirement to deposit more funds to the margin account for the margin to rise again to the minimum level. Otherwise, all the trader’s assets are liquidated to cover losses. Of course, it is the most unpleasant scenario that should be avoided by monitoring the market situation, closing unprofitable positions, and promptly reacting to margin calls.

A margin call is a notification of a user about the fact that the position is unprofitable and may be liquidated soon. Users are given an opportunity to respond to the current market situation with one of the following options:

• keep the position and increase it by replenishing the margin balance;

• completely close the position.

Margin Call is activated at the loss of 25% of the personal funds in the position (excluding leverage).

Example: A user has 2000 USDT on their balance and an open Long position for 1 BTC at the price of 10 000 USDT with 5x leverage. 20% (the amount of invested funds) is 2000 USDT. When this amount decreases to 15% of the total position amount (in this case, to 1 500 USDT), that means that the actual losses will reach 2000 - 1500 = 500 USDT, the user will receive a margin call.

Liquidation is an automatic closing of a position at the current market price and return of the borrowed funds which were used to open it.

Liquidation is executed at the loss of 50% of personal funds in the position (excluding leverage).

Example: A user has 2000 USDT on their balance and an open Long position for 1 BTC at the price of 10 000 USDT with 5x leverage. 20% (the amount of invested funds) is 2000 USDT. When this amount decreases to 10% of the total position amount (in this case, to 1000 USDT), that means that the actual losses will reach 2000 - 1000 = 1000 USDT, the position will be closed automatically.