What is margin ratio on OKX and why is it important?

Understanding the Margin Ratio on OKX

The margin ratio on OKX is a critical metric used in futures and margin trading to determine the health of a user’s position. It reflects the relationship between a trader’s equity and the required margin to maintain open positions. This ratio is expressed as a percentage and helps users understand how close their positions are to being liquidated. A higher margin ratio indicates a safer position, while a lower one signals increased risk.

In practical terms, the margin ratio is calculated using the formula:Margin Ratio = (Equity / Required Margin) × 100%Here, equity refers to the current value of the margin account, including unrealized profits or losses. The required margin includes initial margin, maintenance margin, and any fees or liabilities associated with open positions.

When trading on OKX, especially in cross-margin or isolated-margin modes, the margin ratio dynamically changes with market movements. If the price of the underlying asset moves against the trader, unrealized losses reduce equity, thereby decreasing the margin ratio. Once this ratio drops to or below the maintenance margin level, the system may trigger a liquidation.

How Margin Ratio Affects Position Safety

The margin ratio directly impacts the safety of a leveraged position. OKX uses this value to monitor whether a trader has sufficient funds to cover potential losses. Each contract type has a predefined maintenance margin rate, and if the margin ratio falls to that level, the position becomes vulnerable.

For example, if a futures contract requires a 1% maintenance margin, the margin ratio must stay above this threshold. If it dips below, OKX initiates auto-deleveraging or liquidation procedures to close the position. This mechanism protects both the trader and the exchange from excessive losses.

Traders can monitor their margin ratio in real time within the OKX trading interface. In the positions tab, the current margin ratio is displayed alongside liquidation price and unrealized P&L. Keeping this ratio well above the maintenance level provides a buffer against sudden market volatility.

To improve the margin ratio, users can:

• Add more margin to the position
• Reduce leverage to lower required margin
• Close part of the position to free up margin
• Set stop-loss orders to limit downside risk

Differences Between Isolated and Cross Margin Modes

OKX offers two margin modes: isolated margin and cross margin, each affecting how the margin ratio is calculated and managed.

In isolated margin mode, a fixed amount of margin is allocated to a specific position. The margin ratio is based solely on that allocated amount. If losses consume the entire margin, the position is liquidated. This mode allows precise risk control since losses are limited to the assigned margin.

In cross margin mode, all available balance in the wallet can be used as margin for open positions. The equity used in the margin ratio calculation includes the entire account balance. This can delay liquidation during temporary price dips, but exposes more funds to risk.

Key differences include:

• Isolated margin: Margin ratio depends on allocated funds only
• Cross margin: Margin ratio uses total account equity
• Isolated mode gives better control over individual positions
• Cross mode may offer more flexibility during volatility

Traders should choose the mode based on their risk tolerance and trading strategy. Conservative traders often prefer isolated margin to contain risk, while experienced traders may use cross margin for capital efficiency.

How to Check and Improve Your Margin Ratio on OKX

Monitoring and managing the margin ratio is essential for avoiding liquidation. On the OKX platform, users can access this information through the Futures or Margin trading dashboard.

To check your margin ratio:

• Log in to your OKX account
• Navigate to the Futures or Margin section
• Select the relevant trading pair
• View the Positions tab
• Locate the Margin Ratio field next to your open position

If the margin ratio is too low, immediate action is required. To increase it:

• Click “Add Margin” next to the position
• Choose the amount and asset to transfer
• Confirm the transaction
• Wait for the margin ratio to update in real time

Alternatively, you can reduce position size:

• Place a reduce-only order to close part of the position
• Wait for execution
• Observe the updated margin ratio

Using reduce-only orders ensures you do not accidentally increase leverage. These orders only decrease existing positions and are available in both futures and margin trading interfaces.

Liquidation and Auto-Deleveraging Triggers

When the margin ratio reaches the maintenance margin level, OKX triggers liquidation protocols. The system automatically closes the position at the prevailing market price to prevent further losses.

Before full liquidation, OKX may issue margin calls or warning notifications if the ratio approaches dangerous levels. These alerts appear in the app and via email, giving traders a chance to act.

In extreme cases, if the market moves too quickly, auto-deleveraging (ADL) may occur. This means OKX closes positions of opposing traders to balance the system. ADL rankings are based on profitability and leverage, with highly profitable short positions being closed first during long liquidations, and vice versa.

To avoid these scenarios:

• Maintain a margin ratio well above 5%
• Use stop-loss and take-profit orders
• Avoid maximum leverage on volatile assets
• Regularly monitor account health

FAQs

What happens if my margin ratio hits 0%?If your margin ratio reaches 0%, it means your equity has dropped to zero due to losses. OKX will immediately liquidate the position to prevent negative balance. You will lose the entire margin allocated to that trade.

Can I withdraw funds if my margin ratio is low?No. If your margin ratio is below a certain threshold, OKX blocks withdrawals related to the margin account. Funds are locked until positions are closed or the ratio improves.

Does funding rate affect the margin ratio?Yes. In perpetual futures, funding payments are deducted from or added to your equity. If you pay funding, your equity decreases, which lowers the margin ratio. Receiving funding increases equity and improves the ratio.

Why does my margin ratio change even when the price is stable?The margin ratio can fluctuate due to funding rate settlements, mark price adjustments, or changes in maintenance margin requirements. Even without price movement, these factors impact your equity and thus the ratio.