2-Minute Overview: Full Margin vs Isolated Margin - A Life-and-Death Question in Cryptocurrency Leverage Trading
Core Differences;
Dimension Isolated Margin Model Full Margin Model
Margin Source Individually allocated fixed amount Entire account balance
Risk Isolation Each position is independent All positions share
Liquidation Consequences Only lose the margin of that position Might lose all assets
Applicable Scenarios High-risk strategies/hedging Hedging/quantitative trading
Life-and-Death Experiment: Two Outcomes with 2000 USDT
Scenario Setup:
Principal: 2000 USDT
Leverage: 10x long BTC
Opening Price: 10000 USDT
Isolated Margin Allocation: 1000 USDT margin
When Price Plummets:
1. 8000 USDT (down 20%):
Isolated Margin: Forced liquidation! Lose 1000 USDT margin, account remains 1000 USDT
Full Margin: Unrealized loss of 1000 USDT, but position remains
2. 7000 USDT (down 30%)
Isolated Margin: Already stopped loss, total loss locked at 1000 USDT
Full Margin: Liquidation! 2000 USDT wiped out
When Price Rebounds:
If rebounding from 8000 USDT to 12000 USDT:
Isolated Margin: Missed 4000 USDT profit opportunity
Full Margin: Not only recovered but also gained 2000 USDT
Three Golden Rules
1. Beginner Survival Guide:
First time trading contracts, it's recommended to use isolated margin
Single position should not exceed 20% of total funds
Set forced liquidation price ≥1.5 times estimated volatility
2. Advanced Strategies for Professionals:
Arbitrage trading is more efficient with full margin
Use cross-margin mode when hedging
It is advisable to keep 30% buffer funds in a full margin account
3. Death Warning:
Full margin meets a 312/519-style crash = account goes to zero
Isolated margin chain explosions may trigger a "death spiral"
Both models could face liquidation in extreme market conditions
Full margin is betting your life, isolated margin is betting on a game. Smart people neither leave the table nor bet all their chips.
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