Isolated Margin Mode
Each position has its own dedicated margin. For example, you open a BTC/USDT long position worth $1,000 and assign $100 as margin to this position in Isolated Margin Mode.
If the position incurs a loss, only the $100 margin is at risk. If liquidation occurs, it will only affect this position, and other trades remain untouched.
Pros:
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Independent risk control: Liquidation of one position won’t impact others.
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Clear P&L: Gains or losses are isolated per position.
Cons:
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Requires active margin management for each position.
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Lower capital efficiency since funds are locked individually.
Cross Margin Mode
Shares margin across all open positions in the same account. For example, you have $5,000 in your account and choose to open two positions: BTC/USDT long: $2,000; ETH/USDT short: $1,000. Both positions share the $5,000 margin.
If the BTC trade incurs a loss, the system uses funds from your remaining margin to keep it open. However, if total losses exceed the margin, your account will be liquidated.
Pros:
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Higher capital efficiency: Funds are shared across all positions.
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Simpler to manage: No need to assign margin manually.
Cons:
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Higher risk: Losses in one position can drain the entire account.
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Harder to control risk for individual positions.
Which Should You Choose?
Choose Isolated Margin if:
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You want to limit risk for specific trades.
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You are trading in volatile markets and prefer controlled losses.
Choose Cross Margin if:
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You are confident in your strategy and want higher capital efficiency.
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You prefer simplicity in managing multiple trades.
Summary
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Isolated Margin: Best for risk-averse traders focused on protecting their account.
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Cross Margin: Ideal for risk-tolerant traders aiming to maximize capital usage.
Trade smart, and always choose the margin mode that aligns with your strategy!
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