Bitget futures: risk margin

What is the risk margin?

The risk margin is a reserve established by Bitget to address extreme market conditions, such as collateral shortfall risks. Its primary purpose is to cover losses that exceed a user's account balance after liquidation. If the account assets are insufficient, the platform will utilize the risk margin to cover the shortfall, preventing systemic risks.

Simply put, the risk margin acts as a safety cushion, jointly maintained by Bitget and its users to help mitigate potential risks from extreme market volatility.

How does the risk margin work?

1. Post-liquidation process

￮ When liquidation is triggered on a user's position due to market fluctuations, the system automatically closes and settles the position.

￮ Any remaining assets in the account after liquidation (i.e., a positive account balance) will be added to the risk margin to enhance the platform’s risk management.

￮ If the account balance is negative (i.e., collateral shortfall), the deficit will be covered by the risk margin.

2. Order price and market volatility

￮ When liquidation is triggered, the system closes the position at the best available market price. However, due to market depth variance and volatility, the actual liquidation price may differ from the trigger price.

￮ This difference may result in fluctuations in the risk margin balance, meaning the final deposit or deduction may not always match expectations. Traders should be aware of how market volatility can impact liquidation outcomes.

Why the risk margin matters

The risk margin ensures that user losses do not spiral out of control, even in extreme market conditions, while allowing Bitget to effectively absorb part of the losses. By efficiently maintaining and utilizing the risk margin, Bitget has the power to effectively defend against collateral shortfalls, preventing disruptions to the overall trading environment caused by significant individual user losses.