# Margin

## Isolated Margin Method

The Kana Perps Platform uses the Isolated Margin method, requiring traders to maintain sufficient margin to open and manage their positions effectively.  Under this system, traders need an initial margin amount to open a trade order and a maintenance margin amount to keep the order active/open in the orderbook. 

The initial margin requirement is calculated using the below formula:

<mark style="color:red;">**Margin= (Position Size X Mark Price) / Leverage**</mark>&#x20;

> &#x20;(in simpler words, Margin equals order value divided by leverage)

**Position Size**: The quantity of the asset being traded (e.g., 35.71 APT for a $250 trade order at $7 per APT).

**Mark Price**: A fair value price derived from market-wide data to calculate margin and prevent manipulation.

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#### Example:

With a current asset trading price of $7 per APT and an order value of $250 USDT, the initial maintenance margin required to open a trade order would be -

If we take 10x leverage:

* Margin Used:  35.71 X 7 / 10 = 25 USDT&#x20;

For 20x leverage:

* Margin Used: 35.71 x 20 / 20 = 12.5 USDT

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## Margin Management & Liquidation

Traders must maintain a maintenance margin whenever they have active trades, which is a smaller proportion of the initial margin, to keep positions active. A margin call will be issued if the collateral falls below this threshold due to price fluctuations, which will liquidate your trade order.&#x20;

The liquidation threshold, also known as the maintenance margin, is the minimum margin requirement that traders must maintain to keep their positions open. If the account balance falls below this threshold due to adverse price movements, the position will be automatically liquidated to prevent further losses.

Maintenance Margin Calculation:

Our maintenance margin is set at 2.5% of the position’s notional value.

Using the previous example:

Based on the metrics in the initial maintenance margin example, we have &#x20;

* Notional Value: 35.71 × 7 = 250 USDT
* Maintenance Margin: 250 × 0.025 = 6.25 USDT

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