Understanding Portfolio Margin
A plain-English walkthrough of how BULK's portfolio margin works, with a worked example. For the full mathematical specification, see docs.bulk.trade/bulk-exchange/portfolio-margining.
The basic idea[edit]
Most exchanges calculate margin position-by-position: open two positions, and your total collateral requirement is just the sum of what each one needs on its own. That approach ignores something a trader intuitively understands — if your two positions tend to move in opposite directions, they're not adding independent risk, they're partially cancelling each other out.
BULK's portfolio margin model accounts for this by looking at your whole account as a single unit and factoring in the historical correlation between the assets you're holding. The more your positions offset each other's risk, the less total collateral the system requires.
Worked example[edit]
BULK's own documentation walks through this scenario: a trader holds
- a long BTC perpetual position, and
- a short ETH perpetual position,
both at 10x leverage, with BTC and ETH showing a historical correlation of roughly 0.85 (i.e. they tend to move together most of the time).
Because a long-BTC / short-ETH combination is effectively a bet that BTC will outperform ETH — not a bet that both will simply go up or down — the two positions substantially hedge each other's market-direction risk. BULK's documentation cites a resulting margin requirement 30–70% lower than what the same two positions would require if margined in isolation (i.e., calculated separately with no correlation credit).
The exact discount you get depends on the live correlation between the specific assets you're holding and your leverage — it isn't a fixed number, it's recalculated continuously.
What actually drives the maintenance margin rate[edit]
Behind the scenes, BULK doesn't use one fixed maintenance margin percentage. It uses what its documentation calls a "dynamic lambda surface" — a rate that adjusts based on three things:
- Your leverage — higher leverage, higher required margin rate.
- Liquidity impact — how much it would actually cost (in slippage) to close your position given current order book depth. Illiquid positions carry a higher margin requirement than liquid ones of the same size.
- Market regime — BULK classifies the market into one of nine states (bearish / neutral / bullish, crossed with low / medium / high volatility) and adjusts margin requirements accordingly, smoothing transitions between regimes so margin requirements don't jump erratically.
This is a meaningfully different approach from traditional risk models like CME SPAN or Eurex Prisma, which recalculate risk in periodic batches using a fixed set of stress scenarios — BULK's model is continuous, so your margin requirement reflects current conditions rather than a stale snapshot.
Isolated margin: the alternative[edit]
If you'd rather not have one position's risk profile affect your others' margin at all, you can flag an individual order as isolated instead. That position gets its own dedicated sub-account with its own collateral, walled off from the rest of your portfolio — but you also give up the correlation-based discount described above for that position. See Isolated Margin in the glossary, and Sub-Account for how BULK's up-to-64-sub-accounts structure works.
See also[edit]
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