In the cryptocurrency circle, many people often cannot distinguish between isolated margin and cross margin when trading contracts. They easily open positions with leverage, only to end up liquidated without knowing how it happened. Today, I will clarify these two common trading modes to help everyone make rational choices and avoid risks.
Isolated margin mode: Risk is controllable, suitable for cautious operations.
Isolated margin is a risk control method. For example, suppose your account balance is 5000U, and you choose to open a position with 500U. Even if the market suddenly reverses, you will only lose this 500U at most, and the other funds will be unaffected. This model is very suitable for those who want to proceed steadily and reduce risks. Each trade is executed independently, so the entire account is not affected by a single position, effectively controlling losses.
Cross margin mode: Behind high returns lies great risk.
Cross margin involves putting all the funds in your account into one position. If liquidation occurs, the system will use the remaining funds in your account to sustain your position until the funds are completely exhausted. Although it seems to have a high margin for error, the actual risk is very high, especially for those who do not set stop losses and are used to holding positions. Once the market reverses, it may lead to losses for the entire account. Therefore, cross margin is more suitable for those with a mature trading system who can strictly implement risk control.
How to choose a mode that suits you?
Newbie and contract novice: For beginners who are just getting into contract trading, using isolated margin is the safest choice. This model effectively protects your principal and prevents a total liquidation that takes away all your funds at once. Isolated margin gives you more time to learn and accumulate experience, avoiding being defeated by the market right from the start.
Experienced traders: If you already have some experience and can strictly adhere to risk control rules, you might consider using cross margin to improve trading efficiency. Cross margin can quickly amplify profits when you are confident, but at this point, you must set stop losses and strictly manage each risk.
Conclusion: Contract trading requires rationality and steadiness.
The true core of contract trading lies in 'being able to hold out for a long time and move steadily'. There is no better option between cross margin and isolated margin; the key is whether you can manage your own risk. If you are a beginner, it is advisable to start with isolated margin to protect your principal first; when you have enough experience and strict risk control, consider using cross margin to improve efficiency and amplify returns.
Remember, contract trading is not a casino; how long you can persist determines how far you can go! Let's lay out our strategies early to seize the opportunities in this market cycle.
