Futures Risk Management: Understanding Margin Usage (MU), Liquidation, & Reduce-Only

Margin Usage (MU) is the key indicator for managing risk on Pintu Futures. This guide explains what MU is, how to calculate it, its danger stage, what happens during liquidation, and how the Reduce-Only feature can help you manage your positions more safely.

What is Margin Usage (MU)?

Margin Usage (MU) is the amount of funds or collateral you use to maintain a leveraged position. On Pintu Futures, MU is shown as a percentage (%).

The higher the percentage, the more of your funds are tied up maintaining your position. Pintu Futures uses cross-margin, so MU reaching 100% can liquidate all your funds down to 0. Because of this, keep your MU within a safe range.

How to calculate Margin Usage

MU is calculated by dividing total maintenance margin by available margin plus total maintenance margin:

MU = Total Maintenance Margin / (Available Margin + Total Maintenance Margin)

Example:

  • Total Maintenance Margin = $100
  • Available Margin = $50
  • MU = $100 / ($100 + $50) = 66.6%

Margin Usage danger stage

MU enters the danger stage once it exceeds 75%. This means your position is at risk of liquidation. Liquidation occurs when MU reaches 100%.

When MU enters the danger stage, you can still lower it in two ways:

  • Adding margin, or
  • Closing open orders.

What is liquidation?

Liquidation is the process where your open position is automatically closed once MU reaches 100%. Since Pintu Futures uses cross-margin, liquidation can result in all your funds on Pintu Futures becoming 0.

What happens during liquidation?

When MU reaches 100%, the exchange runs a check before liquidating your account:

  • If you still have open orders, all open orders are canceled first to lower MU.
  • If there are no open orders, the exchange liquidates the account by taking over all open positions and the remaining margin.

During liquidation, your remaining account balance is taken over by the Clearing House (PT KKI) to cover liquidation costs. Example: if you have Rp1,000,000 in maintenance margin at the time of liquidation, that amount is taken by the Clearing House, bringing your balance to zero.

After that, the Clearing House will strategically close your position in the order book to minimize market impact. If this results in a surplus, the excess is allocated to the insurance fund at CFX. The insurance fund serves as a protective reserve, so the winning party still receives their payout even if the counterparty defaults.

⚠️ Risk Notice: Leveraged futures trading carries high risk. You could lose all your funds in a short period. Make sure you understand how MU and liquidation work before opening a position.

What is Reduce-Only?

Reduce-Only is a Futures order option that ensures your order can only reduce or close an open position, and will never open a new position or increase the size of an existing one.

How does it work?

When the Reduce-Only option is enabled, the system checks your order against your current open position:

  • If the order reduces the position, it’s processed as usual.
  • If the order would potentially increase or flip the position’s direction, the system will reject or adjust (shrink) the order so it doesn’t exceed the existing position size.

Example: You have a Long position of 1 BTC. If you place a Sell order of 2 BTC with Reduce-Only, the system will only execute 1 BTC (closing the position), not the full 2 BTC, which would otherwise open a Short position of 1 BTC.

When should I use Reduce-Only?

This feature is useful when you want to make sure an order only closes a position, for example when placing a Take Profit or Stop Loss order. With Reduce-Only, you avoid the risk of accidentally opening a new position in the opposite direction.

What happens if my Reduce-Only order would increase my position?

The order won’t increase your position. Depending on the condition, the order will either be rejected or automatically shrunk to match the remaining position size that can be reduced.

Can Reduce-Only be used for Limit and Market orders?

Yes. Reduce-Only can be used on both Limit and Market orders, including Take Profit / Stop Loss orders.

Why was my Reduce-Only order canceled or not executed?

Some possible causes:

  • The position you wanted to reduce is already closed (e.g., already liquidated or closed by another order), so there’s no position left to reduce.
  • The order direction doesn’t match your open position (e.g., a Buy Reduce-Only order while you don’t have a Short position).

What’s the difference between a regular order and a Reduce-Only order?

A regular order can increase, reduce, close, or flip a position’s direction. A Reduce-Only order can only reduce or close an existing position — providing an extra layer of safety for risk management.

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