> For the complete documentation index, see [llms.txt](https://docs.tread.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.tread.fi/bots/market-maker-bot/margin-management.md).

# Margin Management

### **Margin Calculations**

The Market Maker Bot features sophisticated margin calculations that account for directional bias and updated exposure tolerances.

**Base Margin Requirements**

**Spot Markets:**

* **Exposure Tolerance**: 8% (increased from 6%)
* **Formula**: `baseMargin = notional × 0.08`
* **Rationale**: Higher tolerance accounts for spot market volatility and margin requirements

**Perpetual Markets:**

* **Formula**: `baseMargin = (notional ÷ leverage) × safetyBuffer`
* **Safety Buffers by Mode:**
  * **Aggressive**: 2.0x safety buffer for higher risk tolerance
  * **Normal**: 1.0x safety buffer for balanced risk management
  * **Passive**: 0.5x safety buffer for conservative trading

**Directional Bias Adjustments**

* **Additional Margin**: Up to 20% more margin for extreme bias
* **Formula**: `adjustedMargin = baseMargin × (1 + |directionalBias| × 0.2)`
* **Examples:**
  * **Neutral (0)**: No additional margin
  * **Moderate Bias (±0.5)**: 10% additional margin
  * **Extreme Bias (±1.0)**: 20% additional margin

**Risk Monitoring**

* **Critical Warning**: Triggered when available margin < 10% of recommended margin
* **Color-coded Indicators:**
  * **Green**: Safe (recommended < available)
  * **Orange**: Caution (recommended ≤ 5× available)
  * **Red**: Insufficient (recommended > 5× available)

**Real-time Updates**

Margin requirements automatically recalculate when you change:

* Notional amount
* Trading pair
* Trading mode
* Directional bias setting
* Account selection

**Best Practices**

* **Conservative Approach**: Use moderate directional bias (±0.3 to ±0.5) to minimize additional margin requirements
* **Adequate Funding**: Maintain available margin at least 20% above recommended margin
* **Mode Selection**: Choose trading modes based on your risk tolerance and available capital
* **Regular Monitoring**: Check margin requirements when market conditions or account balances change