Used Margin (Initial Margin)

Used margin is the amount of your trade balance that is initially withheld for creating a margin position. Unlike free margin, used margin does not count unrealized profits/losses.

Used margin will decrease when part or all of a position is closed.

Used margin is calculated as the size or "Cost" (Avg Price x Open Volume) of an open position divided by the level of leverage selected. 

Leverage Level Used Margin
2x 1/2 of the position size
3x 1/3 of the position size
4x 1/4 of the position size
5x 1/5 of the position size

For example, if you buy 0.5 XBT for 5,000 USD (the price is 10,000 USD per XBT):

  • At 5X leverage, your used margin is 1,000 USD.
  • At 4X leverage, your used margin is 1,250 USD.
  • At 3X leverage, your used margin is 1,667 USD.
  • At 2X leverage, your used margin is 2,500 USD.

Assuming the same position size, it is better to choose the higher level of leverage because it leaves more free margin in the account and thus has a larger buffer from liquidation.

However, if the position size is maximized based on the leverage selected, then a higher leverage would be more risky.