Subject: Update: New Maintenance Margin Calculation

Dear Pi42 Users,

We’ve made an update to how we calculate maintenance margins, and we want to make sure you’re informed.

What’s changing?

Maintenance Margin: This is the amount of margin you need to maintain your position. It’s now calculated using a new formula:

Maintenance Margin = (Base Margin * Maintenance Margin Percentage) / 100

Base Margin: This is the minimum margin you need to open your position. We’ve adjusted how it’s calculated to ensure greater accuracy.

Base Margin = (Position Size / Leverage) * (1 + Buffer) 

• Per Asset Margin: For each asset, the margin is calculated by dividing the total maintenance margin by the quantity, adjusted for position type (LONG or SHORT).

Key Points:

• LONG Positions: Multiplier factor is 1.

• SHORT Positions: Multiplier factor is -1.

• Base Margin and Current Locked Margin: These are different. The base margin is used in these calculations, while the locked margin is used in other margin-related calculations.
  
  

These changes are designed to improve margin accuracy and your overall trading experience. If you have any questions, don’t hesitate to contact our support team.

Liquidation Price Calculation on Pi42

On Pi42, the liquidation price calculation follows a specific formula that takes into account several key factors:

1. First, the system calculates the bankruptcy price: 

Bankruptcy price = Entry price - (margin amount/1.01/position quantity)

2. Then, it calculates the maintenance margin price: 

Maintenance margin price = (Maintenance margin * multiplier factor) / quantity

3. Finally, the liquidation price is determined: 

Liquidation price = Maintenance margin price + Bankruptcy price

For a better understanding of how liquidation works on Pi42, it's important to note that a position goes into liquidation when the Remaining Position Margin is equal to or lower than the Maintenance Margin.

The Remaining Position Margin is calculated as: 

Remaining Position Margin = Initial Margin - Unrealized Losses

How the Liquidation Process Works

When a trader's position reaches the liquidation price, Pi42 automatically places a market order to close that position. This happens when a trader is unable to meet the margin requirements for their leveraged position, indicating they lack sufficient funds to maintain the trade.

At liquidation, Pi42 applies:

1. A taker fee (standard taker fee for the contract)

2. An additional Insurance clearance fee (0.50% for all contracts)

Liquidation Risk Management

To avoid liquidation on Pi42, traders can:

1. Monitor their positions closely, especially during volatile market conditions

2. Add additional margin to positions that are approaching liquidation prices

3. Enable the Auto Margin Top-up feature, which automatically adds margin from your available balance when your position is nearing liquidation

4. Use appropriate leverage based on your risk tolerance

5. Set stop-loss orders at prices above your liquidation price

Understanding how liquidation price is calculated is essential for managing risk effectively when trading futures on Pi42.

Impact on Liquidation Price

This update directly affects when your positions will be liquidated. Remember:

• Liquidation occurs when: Remaining Position Margin ≤ Maintenance Margin

• Remaining Position Margin = Initial Margin - Unrealized Losses

The new calculation provides a more precise maintenance margin value, which changes your liquidation threshold. Depending on your position type and market conditions, this may result in liquidation prices being slightly higher or lower than before.