The Secret Behind the 37% Plunge in Liquidation Rates: The Truth About Isolated Margin That 99% of Traders Don't Know!
In digital asset contract trading, the position management model directly determines survival probability. The core issue for investors facing liquidation often lies in not clarifying the essential differences between isolated margin and cross margin models.
Isolated Margin Model: Builds an independent risk pool for each trade. For example, with a $5000 account, only $500 is used to open a position, meaning that in case of liquidation, the loss is limited to $500, keeping the remaining funds safe. Its core is "risk isolation," suitable for two types of scenarios: first, beginners or risk-averse individuals; second, testing new strategies.
Cross Margin Model: Automatically uses all account funds to add margin when losing, seemingly providing a buffer, but in reality poses significant risks, as ongoing adverse market conditions can wipe out the entire capital, heavily relying on stop-loss discipline. This model is suitable for experienced investors with mature trading systems who can strictly enforce stop-losses, maximizing capital utilization but requiring dynamic monitoring of margin and setting hard stop-losses.
Selection Framework:
Risk Tolerance: Beginners are advised to default to isolated margin; Strategy Adaptation: Use cross margin for trend strategies to amplify profits, and select isolated margin for range-bound strategies to avoid repeated stop-losses; Market Environment: In a one-sided market, use cross margin or achieve excess returns; under high volatility or black swan events, isolated margin has a higher tolerance.
Risk Control Iron Rule: Regardless of the model, three major principles must be adhered to: single trade risk ≤ 2% of total capital; cross margin must preset a forced liquidation line; regularly test the risk control system with historical extreme market conditions.
The essence of contract trading is risk pricing, and model selection is a balance between risk preference and survival probability. True experts transform the risk of liquidation into controllable costs through the triad of model + capital management + stop-loss.
Remember: In the capital market, surviving longer is always more important than earning faster.
The cryptocurrency market presents both opportunities and risks; staying vigilant and seizing the right moment is key. Shenlong has also discovered a project with short-term explosive growth potential, with enormous doubling potential! Want to keep up? Follow Shenlong for free sharing! Follow Shenlong Trends
