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Understanding your Margin Ratio and Liquidation Price

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Learn how your margin ratio and liquidation price work on Roxom and how to reduce your risk of liquidation.

Your Margin Ratio and Liquidation Price are key to knowing how close you are to losing your position. If your Margin Ratio reaches 100%, your position will be liquidated.

What is the Margin Ratio?

The Margin Ratio shows how much of your available margin is being used to keep your position open.

It's calculated from:

  • Your Equity in the position
  • The Maintenance Margin required

Formula:

Margin Ratio = (Maintenance Margin ÷ Equity) × 100

Margin ratio levels to watch

Margin RatioStatusAction
Below 80%Safe zoneMonitor regularly
80% - 99%Warning zoneConsider reducing risk
100%LiquidationPosition will be closed

What is the Liquidation Price?

The Liquidation Price is the Mark Price level at which your margin ratio will hit 100%, causing liquidation.

It's determined by:

  • Your entry price
  • Position size
  • Leverage
  • Remaining collateral
  • Funding payments (if any)

Example

Position details:

  • Position: Long 1 BTC GOLD/BTC at 0.0300 BTC
  • Leverage: 10x
  • Initial Margin: 0.1 BTC
  • Maintenance Margin: 0.025 BTC

If the Mark Price drops enough for your equity to fall to 0.025 BTC, your margin ratio hits 100% and liquidation is triggered.

How to lower your margin ratio

  • Reduce position size: Close part of your position to free up margin
  • Lower your leverage: Reduce leverage to decrease margin requirements
  • Use TP/SL: Set a stop loss directly on your position before your margin ratio reaches dangerous levels

Key takeaways

How margin works on Roxom

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How to set take profit and stop loss

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What happens if my position is liquidated?

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