Binance allows for highly leveraged trading using a sophisticated risk engine and liquidation model. At the baseline level, we allow for 20x margin; a 1,000 USDT collateral deposit can hold 20,000 USDT worth of BTC. This number will change depending on the size of the position - the larger the position, the lower the leverage allowed.
As noted earlier, the first level Initial Margin will always start at 5%, and the Maintenance Margin will always be half of the Initial Margin (so at level 1, it is 2.5%).
Binance uses a “Tax Bracket” setup for leverage. Moving from one bracket to another will not cause the earlier bracket to change its leverage. The leverage will reduce as the trader increases market exposure; this is both to protect the trader and the exchange. Again, as noted earlier, it is highly recommended for the trader to liquidate positions before the collateral falls below the Maintenance Margin to avoid auto-liquidation.
The Leverage Brackets are displayed below. All values are in nominal market exposure in USDT at the Mark Price.
|Level||Amount(nominal value)||IM Rate||MM Rate|
|8||Greater than 60,000,000||50.00%||25.00%|
The relationship between Notional Value and Initial Margin Required is displayed below.
For instance, if a trader has 300,000 USDT exposure, the initial margin used is 5%, or 15,000 USDT.
If instead a trader has exposure of 6,000,000 USDT, the initial margin usage is:
25,000 (for the first 500,000 exposure from 0-500,000) + 150,000 (for the next 1,500,000 exposure from 500,000 to 2,000,000) + 450,000 (for the next 3,000,000 in exposure from 2,000,000 to 5,000,000) + 200,000 (for the 1,000,000 in exposure from 5,000,000 to 6,000,000) = 825,000 or an effective initial margin of 13.75%, or an effective leverage of 7.27x
If a high leverage position falls below the required maintenance margin, a liquidation event will occur.