Risk & Liquidations

Margin System

Understanding Paradex's margin modes and risk management

Margin Modes

Paradex offers two distinct margin modes to accommodate different trading strategies:

Cross Margin

Margin shared across all positions.

Isolated Margin

Margin based on individual positions.

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

Paradex performs two critical margin checks to ensure platform stability and protect against market manipulation:

1

Initial Margin Check

Validates that an account can take additional risk. Examples of when this check is performed:

  • Submitting new orders
  • Requesting withdrawals that would increase account leverage
2

Maintenance Margin Check

Determines if an account is approaching bankruptcy.

If an account fails this check

Account positions and balances will be liquidated

How Margin Checks Work

All margin checks follow a simple comparison formula:

Account Value ≥ Margin Requirement
ComponentCross MarginIsolated Margin
Account ValueSum of
• USD Collateral (USDC balance)
• Unrealized PnL from all positions
• Benefits from PnL offsetting across positions		Position Value only
Margin RequirementBased on
• All open positions
• Exchange-level parameters
• Cross Margin Requirement methodology		Based on
• Individual position only
• Exchange-level parameters

For detailed calculations of Account Value and related risk metrics, see the Margin Term Reference.