What is initial margin and maintenance margin on Bybit?

Understanding Initial Margin on Bybit

When trading perpetual contracts on Bybit, users must deposit a certain amount of funds to open a leveraged position. This required deposit is known as the initial margin. It acts as a security deposit to enter into a futures contract and is calculated based on the position size and the leverage selected. For instance, if a trader opens a $10,000 position with 10x leverage, the initial margin required would be $1,000. This value is locked in the user’s margin balance upon position entry.

The initial margin is not a fee but a portion of the trader’s available balance that is reserved to maintain the open position. It directly affects the maximum leverage available. Higher leverage reduces the initial margin needed, increasing risk exposure. Traders can adjust their leverage on Bybit before placing an order, which dynamically changes the initial margin requirement. This adjustment is visible in the order placement interface, where the system recalculates the required margin in real time.

It’s essential to understand that initial margin does not include additional fees such as funding rates or transaction costs. These are deducted separately from the wallet balance. The initial margin solely serves to open and initially secure the position. On Bybit, both cross margin and isolated margin modes use initial margin, but the way it's managed differs between the two modes.

Differences Between Cross and Isolated Margin Modes

Bybit offers two margin modes: cross margin and isolated margin. In cross margin mode, the entire wallet balance is used as collateral for all open positions. This means the initial margin is drawn from the total balance, and liquidation occurs only when the entire equity drops below the maintenance threshold. This mode increases capital efficiency but also increases risk, as one losing position can affect all others.

In isolated margin mode, traders allocate a specific amount of margin to each position. The initial margin is fixed at the time of opening and cannot exceed the allocated isolated margin. This allows for better risk control since losses are limited to the allocated amount. For example, if a trader sets an isolated margin of 0.1 BTC for a position, only that amount is at risk, regardless of other positions or total balance.

Switching between these modes is done in the trading interface before placing an order. To change the mode:

• Navigate to the contract details page
• Click on the margin mode indicator (displayed as 'Cross' or 'Isolated')
• Select the desired mode from the dropdown
• Confirm the change

The system will then display the updated initial margin requirement based on the new mode. Traders should note that changing the margin mode after opening a position is not allowed unless the position is closed first.

What Is Maintenance Margin on Bybit?

The maintenance margin is the minimum amount of margin required to keep a position open. If the equity in a position falls below this level due to adverse price movements, the position becomes subject to liquidation. The maintenance margin is a percentage of the position size and varies depending on the contract type and leverage used.

For most USDT-margined perpetual contracts on Bybit, the maintenance margin rate ranges from 0.5% to 1% of the position value, depending on the size. Larger positions typically have lower maintenance margin rates to encourage scalability. This value is automatically calculated by Bybit and displayed in the position panel once a trade is open.

The maintenance margin serves as a buffer to cover potential losses during rapid market movements. It is deducted from the initial margin and is not available for withdrawal or reuse while the position is active. If the loss on a position exceeds the initial margin minus the maintenance margin, the system triggers liquidation to prevent further losses.

Traders can monitor their maintenance margin level in real time through the position tab, which shows:

• Entry price
• Mark price
• Liquidation price
• Maintenance margin requirement
• Available balance

This transparency allows traders to manage risk proactively by adding margin or closing positions before reaching critical levels.

How Liquidation Relates to Maintenance Margin

Liquidation occurs when a position’s margin balance drops to or below the maintenance margin level. Bybit uses a liquidation engine that continuously monitors all open positions. When the mark price reaches the liquidation price, the system automatically closes the position to prevent negative equity.

The liquidation price is calculated using:

• Position size
• Entry price
• Leverage
• Maintenance margin rate
• Funding fees (if applicable)

For long positions, the liquidation price is below the entry price; for short positions, it is above. Traders can view this price in the position panel. To avoid liquidation, users can:

• Increase the isolated margin manually
• Reduce leverage
• Close part of the position to lower risk
• Use stop-loss orders

Bybit provides a countdown liquidation feature for some contracts, giving users a brief window to add margin before full liquidation. However, this is not guaranteed during high volatility.

How to Adjust Margin on Open Positions

Bybit allows users to modify the margin allocated to an open position, but only in isolated margin mode. This feature helps traders avoid liquidation by increasing the buffer against price swings.

To add margin to an open position:

• Go to the 'Positions' tab
• Locate the active position
• Click the 'Add Margin' button
• Enter the amount to add
• Confirm the transaction

To reduce margin (only possible if the remaining margin stays above the maintenance margin requirement):

• Click 'Reduce Margin'
• Enter the amount to withdraw
• Confirm

The system will validate whether the reduction keeps the position above the maintenance margin threshold. If not, the request is rejected. This safeguard prevents accidental under-margining.

Frequently Asked Questions

Can I change from isolated to cross margin after opening a position?No, Bybit does not allow switching margin modes for an active position. The mode must be changed before placing the trade. To switch, close the current position and reopen it under the desired margin mode.

Is maintenance margin the same for all leverage levels?No, the maintenance margin rate depends on the position size and contract type. Higher leverage reduces the initial margin but does not proportionally reduce the maintenance margin rate. Bybit uses a tiered system where larger positions have lower rates.

What happens to my initial margin after I close a position?Upon closing a position, the initial margin is released back to your wallet balance, along with any profit or loss from the trade. In cross margin mode, it returns to the shared balance; in isolated mode, it returns from the isolated allocation.

Does Bybit charge fees for adding margin to a position?No, Bybit does not charge any fees for adding or reducing margin. The process is free and only involves transferring funds within your own account balance.