In case of cross futures trading, liquidation can also wash funds from the spot and earn balance as well?
In *cross-margin futures trading*, liquidation can indeed have an impact on both your *futures margin* and *spot account*. Here's a breakdown of how it works:
*Cross Margining in Futures Trading:*
In *cross-margin* mode, your *entire account balance* across both *spot and futures* is used as collateral for futures positions. This means that your *spot assets* (like USDT, Bitcoin, or any other tokens you hold) are not separate from your *futures positions* in terms of margin. Instead, all funds in your account, whether in spot or futures, are considered when calculating margin requirements.
*How Liquidation Works in Cross Margin:*
- When you trade *futures* in cross-margin mode, if your position starts to lose value and the *maintenance margin* requirement is breached, *liquidation* can occur.
- The liquidation happens when your margin balance is no longer enough to cover the losses in the position, and it needs to be closed to prevent further losses.
*Impact on Spot Account during Liquidation:*
- *Spot Funds at Risk*: In cross-margin mode, if your *futures position* is losing money and reaches the liquidation point, *your spot funds* can be used to cover the losses. This means that the funds from your *spot wallet* can be automatically used to fulfill margin requirements to prevent liquidation.
- *Liquidation of Futures Position*: If you are liquidated on a *futures position*, it is essentially a forced close of that position to ensure that you don’t owe more than what you can cover with your available funds.
- *Loss of Spot Funds*: If you don't have enough margin in your *futures wallet* to cover the losses, the funds from your *spot wallet* will be used to cover the deficit. This can result in a loss of funds from your *spot wallet*.
#Crossmargin #cross #IsolatedMargin