1. Cross Margin Mode:
In this mode, all available funds in the account can be used as collateral to avoid forced liquidation.
Under the cross margin mode, all the funds in the user's account are used as collateral for positions.
Users can set cross margin mode for multiple contract positions, and all positions in cross margin mode can share the account balance as margin.
Features: As long as the leverage is moderate, the risk of liquidation is low, so this mode is often used for hedging.
Example: A trader opens a BTCUSDT position. After the BTCUSDT position is forcibly liquidated, the trader will lose all of their USDT balance, but their BTC balance will remain unaffected.
2. Isolated Margin Mode:
In this mode, the collateral allocated to a specific position is limited to a certain amount.
If the collateral for the position is insufficient to cover the unrealized loss, the position will be forcibly liquidated.
In isolated margin mode, the margin for the position is fixed and initially set as the starting margin.
The user can adjust the margin later to change the margin amount.
When the margin balance falls below the liquidation amount, forced liquidation will be triggered.
Features: If the position is forced to liquidate due to price fluctuations, the user will only lose the margin amount for that specific position and it will not affect the other funds in the contract account.
Example: Trader A opens a 10x leveraged position with 10,000 BTCUSD at a price of 20,000 USD. The initial margin for the position is 0.5 BTC. Later, Trader A increases the leverage to 20x, which reduces the required initial margin (collateral) from 0.5 BTC to 0.25 BTC. In the event of forced liquidation, Trader A will only lose the 0.25 BTC initial margin (excluding fees). This allows the trader to effectively control risk.
※ Users can manually or automatically add margin. Reducing margin is only possible for manually added margin after the position is opened. Additionally, reducing leverage is not supported when there are open positions or pending orders.