When learning to operate open positions using perpetual futures products on Bitunix, the selection of margin modes and leverage was mentioned. In this lesson we will focus on margin mode and discuss the selection of different modes.
There are usually two types of margin modes in common cryptocurrency contract trading products today: cross margin and isolated margin.
Types of Margin Mode
Cross Margin
In cross margin mode, the assets in the account will be used as margin for all positions. If forced liquidation is triggered, all positions in cross margin mode will be liquidated together and the assets in the account will be credited with losses.
Isolated Margin
In isolated margin mode, the positions of each trading pair in the account are independent of each other and the margin of the positions is segregated from each other. If one of the positions is forced liquidated, it will not affect the other positions or the assets in the account.
How to Choose the Right Margin Mode
In terms of the use of funds in the account, the cross margin mode is to use all the funds in the account as margin, shared by multiple positions, while each position shares the gains or losses. In contrast, the isolated mode is that each account is independent of each other, and the margin is calculated separately, and gains and losses do not affect each other. In other words, the cross margin mode is to put all the eggs in one basket, while the isolated margin mode is to spread the eggs into multiple baskets.
The isolated margin mode is generally more suitable for short-term investors or novice users who are new to contract trading. Through position and margin segregation, potential losses are limited to a range, which helps to better implement risk control strategies.
The cross margin mode is more suitable for investors who do hedging, or for institutions with large capital volumes and experienced users as a hedging tool.
How to Change Different Margin Mode In Perpetual Futures Trading
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Log in to Bitunix.com, click “Futures” on the top of the page.
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Click Isolated on the right to switch margin modes.
Disclaimer
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Crypto investment involves significant risks. Please proceed with caution. The course shall not be considered investment or financial advice.
Next: Lesson 6 - Profit and Loss Calculation in Futures Trading