# Margining Explainer

## What is Margin

Margin is the collateral that you need to post when entering into a leveraged derivatives contract. The amount required to enter into a new position is referred to as Initial Margin, which is dependent on the leverage offered in the derivatives contract.

If the trade against you, the unrealised loss in your position is adjusted against the initially posted margin. When the remaining margin (Initial Margin - Unrealised Loss) goes below Liquidation Margin, liquidation process is triggered.

Delta Exchange follows a Segregated Margin approach, in which margin is explicitly assigned to each position and is not shared across positions. A position is specific to a particular contract. Thus, for each contract, two margin sub-accounts are maintained:

• Position Margin: Margin allocated to all existing (may include multiple long/ short positions) in given derivatives contract

• Order Margin: Margin allocated to all open orders in a given derivatives contract

It is worth noting that Unrealized PnL is not factored into Position Margin or Order Margin.

Position Margins and Order Margins are allocated from your Wallet Balance. Thus, at any time, the amount that remains unallocated is what is available for placing a new order. This is referred to as Available Balance.

Everytime a new order is placed, the system does three things:

1. computes the Reservation margin for this new order,
2. checks whether $% $, and
3. if $2$ holds, then transfer Reservation Margin amount from Available Balance to the Order Margin\$ of the contract.

## Reserved Margin Computation

Initial Margin (IM) requirements for a standalone order are as follows: