> For the complete documentation index, see [llms.txt](https://docs.coinlocally.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.coinlocally.com/perpetual-contracts/coin-margined-perpetual-contracts/ladder-maintenance-margin-rate.md).

# Ladder Maintenance Margin Rate

### **Maintenance Margin Rate**

The **margin rate** reflects the risk level of a trader's open positions. The **maintenance margin rate** is the minimum margin required to keep a position open. If your margin rate falls to the maintenance margin rate, your position is at risk of being forcibly taken over (liquidated) by the system.

To protect users and the market from unfair or unnecessary liquidations caused by temporary price swings or illiquidity, the system uses the marked price, not just the last trade price, to calculate margin rates.

### **Laddered Maintenance Margin System**

To limit market disruption and reduce the risk of large forced liquidations, the platform employs a **laddered maintenance margin system**:

* **Position sizes are divided into tiers ("ladders").**
* **Each ladder has its own (higher) maintenance margin rate.**
  * As your position size increases, the required maintenance margin rate also increases.
* If your current margin falls below the required rate for your tier, the system will **reduce your position** to the maximum allowed size for the next lower tier.

This "step-down" mechanism helps manage risk more gradually and reduces the chance of sudden, large liquidations that could impact both the trader and the broader market.

**In summary:**

* The maintenance margin rate ensures that each position maintains an adequate safety buffer.
* The ladder system encourages more responsible risk-taking and protects market liquidity, especially for large positions.