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Margin & Liquidation

Your margin is the money you put down to open a bigger trade than your cash alone allows. If your chosen outcome moves against you far enough, PredMart automatically closes your trade to protect the pool. This page explains how margin works, when that happens, and how to stay safe.

Key Numbers

What Value What It Means
Maintenance level 15% The minimum margin you must keep relative to your trade size
Entry buffer 5% Extra cushion required when you open
Max leverage 5x The biggest multiplier you can use
Minimum trade $1 The smallest amount you can put down

Entry Margin vs. Maintenance Level

When you open a trade, you need enough margin to cover both the maintenance level and the entry buffer. This buffer gives you room to absorb small price moves before you hit the danger zone.

Entry margin rate = 15% + 5%

Maximum leverage at entry = 1 / entry margin rate = 5x

Once your trade is open, only the maintenance level matters. Your trade stays open as long as your margin stays above that line.

When You Get Liquidated

You get liquidated when your margin drops to or below the maintenance level.

Margin ratio = (your current margin) / (your trade size at the current price)

Liquidation happens when:

margin ratio <= 15%

Put simply: if the losses on your trade eat into your margin so much that only the maintenance level remains, PredMart closes your trade automatically.

Liquidation takes 100% of your remaining margin. When you are liquidated, PredMart seizes all of the margin left in the trade — and none of it comes back to you. There is no partial liquidation and no surplus refund: even if your position still had some value at that moment, you keep nothing. This is exactly why closing early yourself matters — close early and you keep whatever margin is left; get liquidated and you walk away with nothing.

What Makes Your Margin Drop?

Three things can eat into your margin:

  1. The price moves against you (most common). If you back Yes and the price falls, or you back No and the price rises, you have an unrealized loss that shrinks your margin.

  2. Holding fees add up. A small fee builds up while your trade is open, slowly reducing your margin. See Fees for details.

  3. The market resolves against you. If the outcome you backed loses — say you backed Yes and the event does not happen — the price jumps to $0, wiping out your margin instantly. See Market Resolution.

Take-Profit & Stop-Loss: Exit Before Liquidation

PredMart lets you set automatic exit points:

In fast-moving markets, you might exit slightly past your trigger price.

How to Avoid Liquidation

  1. Use less than max leverage. Opening at 5x puts you right next to the danger zone. Lower leverage gives you more breathing room.

  2. Watch your margin ratio. The app shows your current margin ratio and liquidation price. Check it when prices are moving fast.

  3. Add more margin. You can add extra margin to your trade at any time, straight from your wallet. This pushes your liquidation price further away.

  4. Set a stop-loss. Let the system close your trade before you hit the liquidation line.

  5. Close early. If a trade is going against you, closing it yourself lets you keep whatever margin is left minus fees. Liquidation leaves you with nothing.

Leverage Makes Things Move Fast

Because you are using leverage, your margin changes faster than the price does. A trade at 5x can lose its entire entry buffer with a price move of just 5% against you. Do not underestimate how quickly you can approach liquidation.

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