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Paradex Margin System

Margin modes

Paradex currently only supports Cross Margin (XM) mode.
There will be no “isolated margin” mode. In order to open an isolated position, the user can create a new separate account to trade a single instrument.

Instrument types

All instruments are quoted and valued in USD.
Paradex currently supports only USDC as a collateral asset. You have to deposit USDC on your wallet to trade and all PnL accrued or charged to your wallet will be in USDC.

Margin checks

In order to minimise solvency risk and prevent possible market manipulations during the course of trading, Paradex engine performs following margin checks on client accounts:
  • Initial margin check - validates that account can take more risk. If this check fails then client's action increasing account's risk is rejected. For example:
    1. 1.
      User sends a new order
    2. 2.
      Users requests a withdrawal which would increase account leverage.
  • Maintenance margin check - determines if an account is close to bankruptcy. If this check fails the account positions and balances will be liquidated.
Regardless of the specific use case, all margin checks can be described as a comparison of the Account Value against some Margin Requirement
  • Account Value is equal to the USD collateral value plus any unrealised Pnl from all open positions of this account. Since unrealised PnL is calculated on account level, the user benefits from PnL offsetting among all account's positions which contributes to capital efficiency. Please refer to Margin Term Reference for more details about the calculation of Account Value and other important related risk metrics.
  • Margin requirement is an assessment of the account's overall risk and is expressed in USD. It depends both on the account's open positions as well as exchange-level parameters. The calculation of this requirement is defined by the Cross Margin Requirement methodology