Explanation of Isolated Margin Mode vs. Cross Margin Mode
In perpetual futures trading, the leverage account mode determines how users manage the risk of their positions. NewCoin provides Isolated Margin Mode and Cross Margin Mode, allowing traders to choose the leverage management method that best suits their strategy.
I. Isolated Margin Mode
In Isolated Margin Mode, positions for each trading pair are independent, with risks and margin isolated from each other.
Key Features:
Independent Account Management Each isolated position corresponds to a separate margin account. Example: In a BTC/USDT isolated position, only the USDT allocated to that trading pair can be used as margin.
Risk Isolation The risk rate of each isolated position is calculated solely based on its own assets and liabilities. If a position is liquidated, it only affects that specific position and does not impact other isolated positions.
Independent Operations Adjusting leverage, adding margin, or closing positions must be performed separately for each isolated position.
Suitable Scenarios:
Users who want to control risks for individual positions.
Suitable for running multiple positions and strategies simultaneously.
Prevents losses from one position from affecting all assets.
II. Cross Margin Mode
In Cross Margin Mode, all positions under the account share margin, and risks and margin are cross‑utilized.
Key Features:
Shared Margin All positions in a cross margin account jointly use the account balance as margin. Profitable positions in the account can provide additional protection for losing positions.
Unified Risk Rate Calculation The system calculates the risk rate based on all assets and liabilities under the cross margin account. When the risk rate becomes too high, the system will prompt the user to add margin or close positions.
Liquidation Risk If the overall account risk exceeds the tolerable limit, all positions in the account may be liquidated.
Suitable Scenarios:
Users who want to improve margin efficiency by utilizing their account balance.
Suitable for single‑direction or trend trading.
Profitable positions can offset some losses, reducing the probability of liquidation.
III. Isolated Margin vs. Cross Margin Comparison
Leverage Adjustment
Set separately for each position
Uniform leverage across the account
Margin
Independent margin per position
All positions share margin
Risk Impact
Positions are independent and do not affect each other
Positions influence each other
Liquidation Risk
Liquidation affects only the specific position
Account‑wide liquidation may close all positions
Suitable Strategy
Multi‑position strategies, risk diversification
Improving margin efficiency, trend trading
Summary:
Isolated Margin Mode → Risk isolation, suitable for multi‑strategy and precise position management.
Cross Margin Mode → Shared margin, suitable for single‑direction trend trading and improving capital utilization.
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