Bybit’s risk limit uses the concept of dynamic leverage, which means that the greater the value of the contract held by the trader, the lower the maximum leverage that can be used. In other words, the initial margin requirement will increase by a fixed percentage as the contract value increases. Each contract has a specific maintenance margin rate, and the margin requirement will increase or decrease as the risk limit changes.

Risk limit is a risk management mechanism used to limit the risk of traders holding positions. In a trading environment with large price fluctuations, traders who use high leverage alone to hold large positions will likely bring huge losses in position wear. If the insurance fund has been exhausted, the automatic lightening system may be triggered, thereby bringing additional risks to other traders. Bybit sets risk limits for all trading accounts, that is, traders with large positions need more initial margin to hold positions, optimize risk management, and protect all traders from additional risks.

Each contract has the basic value of the risk limit and its incremental value. Correspondingly, by combining the basic value and incremental value of the maintenance margin and the initial margin, the complete margin requirement for each position can be calculated. As positions increase, maintenance margin and initial margin requirements will also increase. The user must increase or decrease the risk limit through the position panel. Margin requirements will increase or decrease as the risk limit changes.

Bybit will perform step-by-step liquidation processing for users who use high-risk limits, and automatically try to reduce the maintenance margin requirements to avoid all positions being liquidated. For detailed liquidation process, please click here.

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