When a large futures position is liquidated, the impact on the market depends on how much liquidity exists on the other side of the book. A small liquidation has minimal effect. A very large one — if the position exceeds available liquidity — can cause cascading price moves that trigger further liquidations among other traders.
LMEX’s risk limit system addresses this directly. It requires traders holding very large positions to post proportionally more collateral, reducing the probability that a forced closure turns into a disruptive market event.
How Risk Limits Work
Risk limits operate in tiers based on your total position size plus open order size. As you cross each threshold, both the required initial margin and maintenance margin increase. For BTC perpetual contracts:
| Position + Order Size | Maintenance Margin | Initial Margin |
|---|---|---|
| ≤ 100,000 contracts | 0.5% | 1.0% |
| ≤ 200,000 contracts | 1.0% | 1.5% |
| ≤ 300,000 contracts | 1.5% | 2.0% |
| ≤ 400,000 contracts | 2.0% | 2.5% |
| ≤ 500,000 contracts | 2.5% | 3.0% |
| ≤ 600,000 contracts | 3.0% | 3.5% |
| ≤ 700,000 contracts | 3.5% | 4.0% |
| ≤ 800,000 contracts | 4.0% | 4.5% |
| ≤ 900,000 contracts | 4.5% | 5.0% |
| ≤ 1,000,000 contracts | 5.0% | 5.5% |
For other contracts — ETH, LTC, and altcoin perpetuals — the thresholds and increment sizes differ. These are displayed in the risk limit panel on each contract’s trading page.
When Do Risk Limits Apply to You?
Below the base threshold for a given contract, the default margin requirements apply and no action is required. The risk limit system only becomes relevant when you want to hold more than the base maximum — 100,000 contracts for BTC perpetuals.
When you attempt to place an order that would push your combined position and open order size above your current risk limit tier, the system blocks the order and prompts you to increase your limit before proceeding.
A Worked Example
You currently hold 90,000 BTC perpetual contracts and wish to add 20,000 more. Your combined total would be 110,000 — above the 100,000 base threshold. The system will ask you to upgrade to the 200,000-contract tier before accepting the new order.
After upgrading, your maintenance margin requirement rises from 0.5% to 1.0%, and your initial margin from 1.0% to 1.5%. Your liquidation price moves closer to your entry price as a result. This is the direct trade-off: greater position capacity in exchange for a tighter margin of error.
Why Risk Limits Do Not Automatically Reset
When you close a large position back below the base threshold, LMEX does not automatically reduce your risk limit level. You must do this manually.
If you forget, you will continue to hold a higher margin requirement against a smaller position — which is not harmful, but is an inefficient use of capital. After closing down, navigate to the risk limit panel and adjust back to the appropriate tier.
How to Adjust Your Risk Limit
- Open the trading interface for the relevant futures contract.
- Locate the Risk Limit panel in the position or margin section.
- Click Edit.
- Select the tier appropriate for your intended position size.
- Click Confirm.
The change takes effect immediately. Note that you cannot reduce your risk limit level if doing so would leave your existing position in breach of the new, lower margin requirement.
Frequently Asked Questions
Does increasing my risk limit change my liquidation price? Yes. Higher risk limits require more initial and maintenance margin, which moves your liquidation price closer to your entry price. The trade-off is intentional — more position capacity in exchange for reduced buffer before liquidation.
Do risk limits apply to both perpetual and time-based futures? Yes, though the specific thresholds and per-tier increment differ by contract. The risk limit panel on each trading page shows the applicable tiers for that market.
What if I place an order that would exceed my current risk limit without upgrading? The system blocks the order and prompts you to increase your risk limit before it can be placed.
Is there a maximum position size on LMEX? Yes. For BTC perpetuals, the maximum supported position is 1,000,000 contracts. No additional orders can be accepted beyond this regardless of risk limit level.
