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Binance Margin Level and Margin Call

2019-07-05 11:08
Margin trading allows you to add leverage to your positions to increase your potential returns. Binance uses the Margin Level to evaluate the risk level of your Margin Account.

1. Margin Level of Cross Margin

1.1 Users participating in Margin Loans may use the net assets in their Cross Margin Accounts as the Collateral. The digital assets in any other accounts are not included in the margin for Cross Margin trading.
1.2 The Margin Level of the Cross Margin Account = Total Asset Value of the Cross Margin Account / (Total Liabilities + Outstanding Interest), where:
Total Asset Value of the Cross Margin Account = Current Total Market Value of All Digital Assets in the Cross Margin Account
Total Liabilities = Current Total Market Value of All Outstanding Margin Loans in the Cross Margin Account
Outstanding Interest = Amount of Each Margin Loan * Loan Time (in hours, by the time of the calculation) * Hourly Interest Rate - Deduction/Paid Interest
1.3 Margin Level and Operation
Leverage 3x
When your Margin Level > 2, you can trade, borrow, and transfer the excess assets to the Spot Wallet;
When 1.5 < Margin Level ≤ 2, you can trade and borrow, but you cannot transfer funds out of your Margin Account;
When 1.3 < Margin Level ≤ 1.5, you can trade, but you cannot borrow or transfer funds out of your Margin Account;
When 1.1 < Margin Level ≤ 1.3, a margin call will be triggered and the system will inform you through email, SMS, and website (inmail) notifications* to add more collateral (transfer in more collateral assets) to avoid liquidation. After the first notification, you will receive a notification every 24 natural hours.
When Margin Level ≤ 1.1, the liquidation engine will be triggered and all your assets will be liquidated to pay back the interest and loan. The system will inform you through email, SMS, and website (inmail) notifications*. When the Margin Level returns to 1.5, the system will stop the liquidation process.
Leverage 5x (no longer available since 2020/07/16))
  • When your Margin Level > 2, you can trade, borrow, and transfer the excess assets to the Spot Wallet;
  • When 1.25 < Margin Level ≤ 2, you can trade and borrow, but you can’t transfer funds from your Margin Account to your Spot Wallet;
  • When 1.15 < Margin Level ≤ 1.25, you can trade, but you cannot borrow or transfer funds from your Margin Account to your Spot Wallet;
  • When 1.05 < Margin Level ≤ 1.15, a margin call will be triggered and the system will inform you through email, SMS, and website (inmail) notifications* to add more collateral (transfer in more collateral assets) to avoid liquidation. After the first notification, you will receive a notification every 24 natural hours.
  • When Margin Level ≤ 1.05, the liquidation engine will be triggered and all assets will be liquidated to pay back the interest and loan. The system will inform you through email, SMS, and website (inmail) notifications*. When the Margin Level returns to 1.25, the system will stop the liquidation process.
Please note:
The Cross Margin platform has made the following adjustments at 2020/07/16 08:00 (UTC):
  • Users are only able to trade with up to 3x leverage on Cross Margin pairs.
  • Existing 5x leverage positions on Cross Margin can be kept or adjusted to 3x leverage.
1.4 For more information, please refer to the Cross Margin Trading Rules.

2. Margin Level of Isolated Margin

2.1 The net assets in your Isolated Margin account can only be used as the collateral in the corresponding account. The assets in your other accounts (Cross Margin account or other Isolated accounts) cannot be used as collateral.
2.2 The Margin Level of the Isolated Account = Total Value of Assets under the Isolated Account / (Total Value of Liabilities + Unpaid Interest)
Total Value of Assets = Total Value of the Underlying Assets + Nominal Assets in the Current Isolated Account
Total Liabilities = Total Value of the Outstanding Assets in the Current Isolated Account
Unrepaid Interest = (Amount of Each Loaned Asset * Length of the Loan (in hours) * Hourly Interest Rate) - Repaid Interest
2.3 Margin Level and Operation
When the Margin Level (hereinafter referred to as ML) > 2, you can trade and borrow normally. The excess assets in the account can also be transferred to other trading accounts. But the ML still needs to be ≥ 2 after the transfer to maintain the normal asset transfer functions.
  • Initial Ratio (IR)
IR is the initial risk rate after you borrow, which varies for different leverage. For example, the IR is 1.5 under 3x leverage with maximum borrowing, 1.25 under 5x leverage with maximum borrowing, and 1.11 under 10x leverage with maximum borrowing.
  • Margin Call Ratio (MCR)
When MCR < ML ≤ 2, you can trade and borrow, but cannot transfer assets out of the account.
The MCR varies for different leverage. For example, the MCR for a 3x leverage is 1.35, for 5x leverage, it is 1.18, and for 10x leverage, it is 1.09.
  • Liquidation Ratio (LR)
When LR < ML ≤ MCR, a margin call will be triggered. The system will inform you through email, SMS, and website (inmail) notifications* to add more margin (transfer in more collateral assets) to avoid liquidation risk. After the first notice, a notification will be sent every 24 natural hours. If ML ≥ MCR, you will not receive the next notification.
When ML ≤ LR, the system will execute the liquidation process. The assets held in the account will be sold to repay the loan. At the same time, the system will inform you through email, SMS, and website (inmail) notifications*.
2.4 For more information, please refer to the Isolated Margin Trading Rules.

What are Liquidation Clearance Fees?

When your Margin account or Crypto Loan order is being liquidated, the Margin Insurance Fund will charge a certain percentage in Liquidation Clearance Fees. You can view the fees charged from [Margin Order] - [Liquidation History] - [Liquidation Clearance Fee (BUSD)]. You are recommended to manage your risks carefully to avoid forced liquidations. The Liquidation Fee will be calculated as follows:
Product
Liquidation Fee
Cross Margin
Cross Margin Debts * 2%
Isolated Margin
Isolated Margin Debts * The Corresponding Tiered Leverage Clearance Fee Rate
Crypto Loans
Crypto Loan Debts * 2%
Note: The Corresponding Tiered Leverage Clearance Fee Rate = (The Liquidation Risk Ratio of Your Tiered Leverage Isolated Trading Pair - 1) * 8% (the maximum amount that can be charged without exceeding your remaining asset balance after liquidation).
For example, if a user is being liquidated and reduced positions in ADA/ETH (Tier 3), then the Clearance Fee Rate = (1.165 - 1) * 8% = 1.32%.
The liquidation price displayed on the order page is for reference only. The actual liquidation price will be affected by market fluctuations and other factors. The final liquidation price is subject to the actual price the platform charges. Please note that price differences may lead to asset losses when liquidation happens. Therefore, please keep track of the LTV ratio to avoid being liquidated.
*Binance is not responsible for the message delivery failure caused by external factors, such as but not limited to local restrictions, service provider policies, and device issues.