How maintenance margin actually works
Why a 20x position liquidates before a 5% move, how tiered risk brackets change the answer as size grows, and where the maintenance amount comes from.
Ask ten leveraged traders where a 20x long liquidates and nine will say "5% down". It is a clean answer, it is easy to remember, and it is wrong in the direction that costs money. The real number is closer, it moves as your position grows, and the gap between the two is where a surprising number of evaluation accounts die.
This post walks through the arithmetic the exchange actually runs, using the same tiered model Propology enforces.
Initial margin is the easy part
Initial margin is what you post to open a position. It is the only number in this article that behaves the way intuition expects:
initial margin = position notional / leverageIf that $3,000 were the only thing standing between you and liquidation, a 5% adverse move would wipe it out exactly, and the naive answer would be right. But an exchange cannot wait until your margin is exactly zero to close you — by the time it has finished filling, the price has moved further and the account is negative. So it liquidates early, at a threshold called maintenance margin.
Maintenance margin, and why it is tiered
Maintenance margin is the minimum equity a position must retain. It is expressed as a rate on notional, and — this is the part people miss — the rate is not constant. A $10,000 position and a $10,000,000 position are not the same risk to the venue: the larger one moves the book when it is force-closed. So the rate is stepped by notional, in what Binance calls risk-limit brackets.
| Tier | Notional (USDT) | Max leverage | Maintenance rate | Maintenance amount |
|---|---|---|---|---|
| 1 | 0 – 50,000 | 125x | 0.40% | 0 |
| 2 | 50,000 – 250,000 | 100x | 0.50% | 50 |
| 3 | 250,000 – 1,000,000 | 50x | 1.00% | 1,300 |
| 4 | 1,000,000 – 5,000,000 | 20x | 2.50% | 16,300 |
| 5 | 5,000,000 – 20,000,000 | 10x | 5.00% | 141,300 |
Two consequences fall out of that table immediately. First, your maximum leverage is capped by size, not just by your setting: you cannot hold $2,000,000 of notional at 50x no matter what the slider says. Second, maintenance margin is not simply notional × rate — there is a fifth column to account for.
The maintenance amount is a continuity fix
If maintenance margin were just notional × rate, the function would jump at every bracket boundary. At $249,999 of notional you would owe 0.5% (about $1,250); one dollar later you would owe 1.0% (about $2,500). Adding a dollar of size would double your maintenance requirement and could liquidate you on the spot.
The maintenance amount — cum in the exchange API, maintenanceAmount in the Propology risk tier model — is the constant that removes the jump:
maintenance margin = notional × maintenance rate − maintenance amountCheck the boundary at $250,000. Tier 2 gives 250,000 × 0.005 − 50 = 1,200. Tier 3 gives 250,000 × 0.01 − 1,300 = 1,200. Identical. Every maintenance amount in the table is chosen to make the piecewise function continuous, which is why the numbers look arbitrary until you test them at the edges.
Where the liquidation price really is
A position liquidates when equity falls to maintenance margin. For an isolated long, equity is the posted margin plus the open profit and loss:
margin + (mark − entry) × qty = mark × qty × rate − amountSolving for the mark price gives the liquidation level. Take the 20x example: 1 BTC long at $60,000, $3,000 of margin, $60,000 notional — tier 2, so a 0.5% rate and a $50 maintenance amount.
mark = (3,000 − 60,000 + 50) / (1 × (0.005 − 1)) = 57,236You lose roughly 8% of your expected room. That gap widens as the maintenance rate rises: the same position at $2,000,000 of notional sits in tier 4 at a 2.5% rate, where liquidation arrives well before the naive figure and the leverage cap has already forced you down to 20x.
Why this matters more on an evaluation
On a personal account, liquidation is the disaster. On a challenge account it usually is not — because the daily loss limit gets there first.
A $100,000 evaluation with a 5% daily limit can absorb $5,000 of drawdown in a UTC day. Our 1 BTC position at 20x reaches that loss at a mark of $55,000... except it has already been liquidated at $57,236, booking a $3,000 loss and closing the position. The engine flags neither event as a rule breach on its own. What ends the account is the sequence: liquidation realises the loss, the trader re-enters to make it back, and the second position takes equity through the daily floor.
- Size from the distance to your daily floor, not from your leverage setting.
- Recompute the liquidation price after every add — crossing a bracket boundary raises your maintenance rate on the entire position, not just the new part.
- Treat the leverage cap as an artefact of position size: at $1,000,000 of notional the platform will not give you more than 20x, whatever your plan allows.
None of this is exotic. It is four lines of arithmetic that most traders never run because the exchange shows a liquidation price already computed. Run it once by hand at the size you actually trade, and the number stops being a surprise.