> For the complete documentation index, see [llms.txt](https://docs.supertrade.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.supertrade.com/trading-mechanics/margin-and-liquidation.md).

# Margin & Liquidation

Margin is the portion of your account balance set aside as collateral to support open positions. Understanding how margin works is essential for managing risk and avoiding account breaches.

## Margin and Collateral

* **Initial Margin:** The capital reserved when you open a position. This depends on the asset class and leverage.
* **Maintenance Margin:** The minimum balance required to keep a position open. If your equity falls below this threshold, the position becomes at risk of liquidation.
* **Collateral:** Your account balance (virtual funds in Supertrade) acts as collateral. All trades are backed by this collateral.

## Margin Level and Monitoring

Supertrade provides clear metrics in your trading dashboard:

* **Margin Level:** Ratio of equity to margin used. A higher percentage indicates stronger protection against liquidation.
* **Free Margin:** The unused margin available for opening new trades.
* **Used Margin:** The margin already allocated to existing positions.

Monitoring these values is key. If free margin drops too low, new positions cannot be opened, and existing trades are at higher risk.

### Liquidation

* If losses push your account equity below the required maintenance margin, liquidation may occur.
* During liquidation, open positions are closed automatically to protect against further losses.
* Liquidation events count as breaches in Supertrade, and can result in the account being paused.

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Margin management is as critical as trade selection. Proper use of leverage and consistent monitoring of collateral help preserve your account and increase the chance of long-term success in Supertrade.
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