Binance Futures: What happens to my margin if my ROE is -100%?

I have wanted to explore futures with some risk capital I have. Ok so, I understand liquidation price and leverage (I think). So say I go LONG the ETHUSDT Contract (let’s assume it’s one that expires so that funding fee can be ignored) and pay my initial margin. Then it goes into loss. Assume that my ROE is now beyond NEGATIVE (-) 100%. Case 2 below shows an example on when this may happen.

From what I understand, after I pay my initial margin, I do not have to pay anything more until I get liquidated. Am I correct to understand that?

What happens if I close my position when my ROE is a high negative amount (eg. -193%, as shown below). I understand that because this is on margin, I can lose beyond 100%. But that contradicts the previous statement about not having to pay until I get liquidated. Do I have to top up extra money when closing my trade?

I apologize if this is confusing. I myself am a bit perplexed on this matter. I always set stop losses so I want to know where to set a stop loss to prevent myself from losing anything beyond what my wallet has.


||Case 1|Case 2|
|Wallet Balance|2500 USDT|2500 USDT|
|Entry Price|3100 USDT/ETH|3100 USDT/ETH|
|**Initial Margin***|**1550 USDT**|**155 USDT**|
|Liquidation Price*|612.24|612.24|
|PNL when Exit Price = 3400*|300 USDT|300 USDT|
|**ROE when Exit Price = 3400***|**19.35%**|**193.55%**|
|PNL when Exit Price = 2800*|-300 USDT|-300 USDT|
|**ROE when Exit Price = 2800***|**-19.35%**|**-193.55%**|

What do you think?

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One Comment

  1. First of all: If you have to ask, you probably should stay away from futures.

    But answering: if you are on isolated margin, as soon as your ROE gets to -100% the position will get closed, which is called a margin call.

    If you are on cross margin, then the margin from other (possibly positive) positions will be taken away and put as margin in this position so it doesn’t get closed. If your overall account margin gets to 0, all positions are liquidated and you lose everything.

    So, if you are on isolated margin, the “balance” you put when computing the liquidation price is wrong. It should be the same as your initial margin.

    If you are on cross margin, then your entire balance works as a margin, and when the initial margin gets depleted, it will automatically deposit more money (from the balance) as margin in order to keep the position open.

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