What is the liquidation fee for dYdX?

Margin trading in cryptocurrency exchanges involves a crucial metric known as the Maintenance Margin Fraction. This fraction serves as a threshold to determine the health of a trader's position.

The calculation of the margin fraction involves dividing the notional value of a trader's open position by their equity. Essentially, it measures how much leverage a trader is utilizing in relation to their available funds.

If the margin fraction surpasses the predetermined Maintenance Margin Fraction set by the exchange, it signals that the trader's position is at risk of liquidation. This scenario arises when the value of the trader's holdings cannot sufficiently support the open position.

With regards to margin trading, BTCC provides traders with clear guidelines on the Maintenance Margin Fraction and how it affects their positions. By understanding this metric, traders can make informed decisions to manage their risk effectively.

In such cases, the exchange will automatically close (liquidate) the trader's position to prevent further losses. This is a safety mechanism designed to protect the exchange and other traders from the risks associated with undercapitalized positions.