# Polymarket Margin Trading
A margin account lets you trade a larger position than your own cash by borrowing against collateral. Polymarket doesn't offer one natively — but **PredMart is the margin account for Polymarket**. You can post Polymarket shares as collateral and borrow USDC against them, or open a position on margin in one click without holding any shares first. This guide explains what margin trading on Polymarket means, how PredMart's margin works, the margin requirements (initial and maintenance), and a full worked example.
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## Does Polymarket Have Margin Trading?
Not on its own. Polymarket is a spot prediction market: you buy outcome shares with USDC you already have, and your position is limited to your cash. There's no built-in way to trade on margin or with leverage.
PredMart adds that layer on top. It's a non-custodial margin account purpose-built for Polymarket — think of a brokerage margin account, but fully on-chain. You either:
1. **Post collateral and borrow** — deposit Polymarket shares you already hold, borrow USDC against them, and use that USDC however you like (including buying more shares), or
2. **Open on margin in one click** — sign a single message and PredMart combines your USDC with a pool advance to open a larger position for you, no shares needed up front.
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## What Is Margin Trading?
Margin trading means using borrowed funds to increase the size of a position beyond what your own capital would allow. You put up a fraction of the position's value (your **margin**), and borrow the rest. Gains and losses are calculated on the **full** position, so both are amplified relative to your margin.
Two numbers define any margin system:
- **Initial margin** — the minimum share of the position you must fund yourself to open it.
- **Maintenance margin** — the minimum equity you must keep before the position is force-closed (liquidated).
On PredMart these come directly from the protocol's flat **80% LTV** and **90% liquidation threshold**.
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## How Margin Trading Works on PredMart
When you open a margin position, PredMart pulls your USDC equity, advances additional USDC from the lending pool, buys the Polymarket shares on the CLOB, books them as collateral, and records the advance as debt — atomically, in one signed operation. The shares you hold *are* the collateral securing the loan.
Because PredMart applies a flat 80% LTV at every share price, your borrowing power and your maximum position size are the same whether the shares trade at $0.20 or $0.90. All operations are gasless meta-transactions: you sign, the protocol relays.
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## Margin Requirements
| Requirement | PredMart value | What it means |
|---|---|---|
| **Maximum leverage** | 5x | You can control up to 5× your own capital |
| **Initial margin** | 20% | To open, you fund at least 20% of the position; the pool advances up to 80% |
| **Maintenance margin** | ~10% | If your equity falls to ~10% of the position's value, you're liquidated |
| **Liquidation trigger** | Health factor < 1.0 | Health factor = (collateral × 0.90) ÷ debt |
In practice, open at around **4x rather than the full 5x**. Starting at the maximum leaves almost no buffer — a single tick against you can drop your health factor below 1.0 and trigger liquidation.
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## Worked Example
- **Target exposure:** $4,000 of "Yes" at $0.50 = **8,000 shares**
- **Your margin (equity):** $1,000 **Leverage:** 4x
- **Pool advance (debt):** $3,000
- **Health factor at open:** (8,000 × $0.50 × 0.90) ÷ $3,000 = **1.20**
- **Liquidation price:** ~$0.417 — if the share falls from $0.50 to about $0.417, the position is liquidated
**If the market resolves Yes (share → $1.00):**
8,000 × $1.00 = $8,000. Repay $3,000 debt → $5,000 surplus. Profit = $4,000; the 10% profit fee takes $400 → **net ≈ $4,600 on $1,000 of margin** (+360%). The same $1,000 spent unleveraged buys 2,000 shares and returns $2,000 (+100%).
**If the share drops to $0.40 before resolution:**
Below the ~$0.417 liquidation price, the position is liquidated: collateral is sold, debt repaid, a 5% liquidator fee charged, and you lose your $1,000 margin. PredMart is non-recourse — you never owe more than your margin.
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## Long and Short on Margin
Margin trading on PredMart works in both directions. Open a margin position on a market's **Yes** token to go **long** (you profit if the event happens), or on its **No** token to go **short** (you profit if it doesn't). The mechanics, margin requirements, and liquidation rules are identical — see [How to Short on Polymarket](./how-to-short-on-polymarket).
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## The Risks of Margin Trading
1. **Amplified losses.** A 4x position loses roughly 4× as fast as spot. Your downside is capped at your margin (non-recourse), but that margin can go to zero quickly.
2. **Liquidation.** Cross the maintenance margin and the entire position is sold in one transaction, with a 5% liquidator fee — there's no partial unwind.
3. **Interest.** The borrowed USDC accrues interest continuously, eroding your equity even when the price is flat. Long-dated positions need monitoring.
4. **Liquidity.** Thin markets have wider spreads and lower borrow caps, which limit position size and worsen exit prices.
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## Fees
Opening a margin position charges a flat per-operation fee (covering gas, since the operation is gasless for you), and borrow interest accrues while the position is open. Closing in profit charges a **10% profit fee** on your gains (7% to lenders, 3% to the protocol). Losing trades and liquidations pay no profit fee.
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## Frequently Asked Questions
### Does Polymarket have margin trading?
Not natively. PredMart is a non-custodial margin account that adds margin and leverage on top of Polymarket — up to 5x at any share price.
### What is the margin requirement on Polymarket?
Through PredMart, the initial margin is 20% (5x maximum leverage) and the maintenance margin is about 10% of position value. Fall below maintenance and the position is liquidated.
### Can I margin trade with shares I already own?
Yes. Deposit your existing Polymarket shares as collateral and borrow USDC against them — then use the USDC to buy more shares or for anything else.
### What happens if my margin position is liquidated?
The full collateral is sold to repay the debt, a 5% liquidator fee is applied, and you lose your margin. Because the protocol is non-recourse, you never owe more than the margin you put up.
### How is this different from leverage trading?
They're the same thing described two ways: margin is the capital you post, leverage is the multiple it controls. Posting 20% margin is the same as trading at 5x leverage. See [Leverage Trading on Polymarket](./leveraged-trading).
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## Next Steps
- [Leverage Trading on Polymarket](./leveraged-trading) — the full step-by-step mechanics
- [How to Short on Polymarket](./how-to-short-on-polymarket) — margin trading the downside
- [Risk Parameters](./risk-parameters) — LTV, health factor, and liquidation in depth