Understand Full Margin and Isolated Margin in 3 Minutes: Where Did Your Money Go?
Must-read for beginners! Today, I'll explain the critical differences between these two trading modes in simple terms, so you can at least save 30% in losses!
1. Isolated Margin Mode: It's all about the thrill
Your margin is like chips on a gambling table; if you lose, that's just the money for that round.
You can go long and short simultaneously without affecting each other.
Biggest advantage: If you get liquidated, you only lose the money for that trade; the rest stays in your pocket.
Suitable for: Short-term traders who like precise targeting, or experienced traders wanting to hedge both long and short positions.
2. Full Margin Mode: Either get rich or lose everything
All the money in your account acts as margin; if you make money, you're happy, but if you lose, you're in trouble.
All positions are calculated together, giving you stronger risk resistance.
Biggest advantage: Less likely to be shaken out by small fluctuations, suitable for large capital operations.
Suitable for: Long-term investors with significant capital or professional traders playing hedging strategies.
Blood and Tears Case Study:
Xiao Ming and Xiao Hong each took $2000 to open a 10x long position.
Xiao Ming used isolated margin: liquidation price is 8000, if it drops to that, he loses $1000 and has $1000 left.
Xiao Hong used full margin: liquidation price is 7000; she can hold on at 8000, but if it continues to drop... she could lose all $2000.
The key point:
Full margin is like putting all your money on one table; either you win big or you cry.
Isolated margin is like placing bets at separate tables; if you lose at one table, you can still play at another.
Final advice:
Beginners are advised to start with isolated margin; at least you won't lose everything overnight. Experienced traders using full margin should also manage their positions; don’t wait until liquidation to remember what I said!
