Assuming that a trader purchases a 0.1 BTCUSDT perpetual swap contract at the market price of 30,000 USDT. If the trader selects 10x leverage in a long position, the initial margin is set to 10% of the notional value and maintenance margin is set to 1% of the notional value.

- The notional value of this position is 30,000 USDT * 0.1 = 3,000 USDT
- The initial margin is 30,000 USDT * 0.1 * 10% = 300 USDT

The trader will thus put up 300 USDT as collateral to hold a long position on BTCUSDT perpetual swap which is valued at 3,000 USDT.

**If BTCUSDT perpetual swap moves from 30,000 USDT to 36,000 USDT**

- Initial Margin = 30,000 USDT * 0.1 * 10% = 300 USDT
- Unrealized P&L = 0.1 * (36,000 - 30,000) USDT = 600 USDT
- Remaining margin = Initial Margin + Unrealized P&L = 900 USDT

Although the (mark) price of perpetual swap grows by 20% the margin grows by 200%.

Note: **Market price** of a perpetual swap will be used to calculate realized P&L, while Unrealized P&L is calculated using **Mark Price.**

**If BTCUSDT perpetual swap moves from 30,000 USDT to 28,000 USDT**

- Initial Margin = 30,000 USDT * 0.1 * 10% = 300 USDT
- Maintenance Margin = 30,000 USDT * 0.1 * 1% = 30 USDT
- Unrealized P&L = 0.1 * (28,000 - 30,000) USDT = -200 USDT
- Remaining margin = Initial Margin + Unrealized P&L = 100 USDT

As your remaining margin of 100 USDT ≥ Maintenance margin is 30 USDT the position is not liquidated.

**If BTCUSDT perpetual swap moves from 30,000 USDT to 26,000 USDT**

- Initial Margin = 30,000 USDT * 0.1 * 10% = 300 USDT
- Maintenance Margin = 30,000 USDT * 0.1 * 1% = 30 USDT
- Unrealized P&L = 0.1 * (26,000 - 30,000) USDT = -400 USDT
- Remaining margin = Initial Margin + Unrealized P&L = -100 USDT

As the remaining margin is below the maintenance margin, the position is immediately liquidated. In this case, the user will lose the entire position and remaining margin.

**Risk Warning:**

Trading in cryptocurrency involves risk and potential losses. Before trading, please make your investment decisions cautiously by considering your investment objectives, experience, and risk tolerance. You are solely responsible for your investment decisions, and Flipster is not liable for any losses you may incur. Derivatives trading, in particular, is subject to high market risk and price volatility. Please obtain independent advice where appropriate. This information should not be construed as financial or investment advice.