What are Cross Margin Mode and Isolated Margin Mode?

In contract trading, cross margin mode and isolated margin mode are two different margin management modes that determine how account funds are used to maintain a trade when your position incurs losses.

— 1. Cross Margin Mode

Mechanism:

• All positions share the same margin within the same account. All available funds in the account are used to support the position, reducing the risk of forced liquidation.

• When a position incurs losses, the system automatically uses available funds in the account to replenish the margin and maintain the position.

Suitable for:

Experienced traders who want to minimize the risk of forced liquidation.

Traders who need to hold multiple positions simultaneously and manage account funds flexibly.

Example:

You have 10,000 USDT in your BiyaPay account and open a long BTC position using cross margin mode, using 2,000 USDT as the initial margin.

• If the price of BTC falls, resulting in a loss of 2,000 USDT, in cross-margin mode, the system will automatically replenish funds from the remaining 8,000 USDT in the account to minimize the risk of forced liquidation.

Risk:

• If all funds in the account are used as margin, excessive losses may lead to the simultaneous liquidation of all positions, resulting in the loss of all funds in the account.

—2. Isolated Margin Mode

Mechanism:

• Each position has an independent margin requirement. Losses only affect the margin of that position and will not affect other funds or positions in the account.

• When losses reach the margin limit of a position, that position will be forcibly liquidated, but this will not affect other funds in the account.

Suitable for:

New traders who want to strictly control losses and avoid affecting other positions.

Users using high leverage to prevent a single loss from impacting the entire account.

Example:

• You have 10,000 USDT in your BiyaPay account and have opened a long BTC position using isolated margin, with 2,000 USDT as margin.

• If the BTC price falls, resulting in a loss of 2,000 USDT, the position will be liquidated immediately, but the remaining 8,000 USDT in your account will not be affected.

Risks:

• If the position’s margin is insufficient, it will be liquidated immediately, even if there are remaining funds in the account, it will not be automatically replenished.

• However, you can manually add margin to the position to extend the holding time and avoid liquidation.

— When to Choose Cross Margin? When to Choose Isolated Margin?

Choose Cross Margin Mode:

You want to reduce the risk of your position being liquidated and are willing to use all the funds in your account to support the trade.

Suitable for low-leverage trading (1-10x), more suitable for long-term holding and high-capital users.

Select Isolated Margin Mode:

You want to strictly control the risk of a single position, so that even if your account is liquidated, it won’t affect the entire account.

Suitable for high leverage trading (10-125x), suitable for short-term trading and markets with high short-term volatility.

— Conclusion

• If you want to maximize capital utilization and reduce the risk of liquidation, choose “Cross Margin Mode”.

• If you want to control the risk of a single position and avoid a single loss affecting the entire account, choose “Isolated Margin Mode”.

BiyaPay contract trading supports both Cross Margin Mode and Isolated Margin Mode, allowing users to switch freely according to their personal risk preferences.