Many people trade contracts, and when asked, 'Are you using full margin or isolated margin?',

the other party looks confused.

More seriously, some people don't even understand the difference between the two and directly open a leveraged position, resulting in liquidation without knowing how it happened.

In today's article, we won't pile up jargon, but will clarify these two models. After reading, you can decide how to choose.

First, let's talk about isolated margin:

Isolated margin means that whatever you invest in this contract, that is the maximum you can lose.

For example, if you have 5000U in your account and only use 500U for this trade, even if the market goes against you, you will only lose that 500U at most,

and it won't drag your entire account down.

Who is it suitable for? It is suitable for those who want to control risk and prefer a steady approach.

You can treat each trade as an independent battle, and won’t lose your entire account due to one mistake.

Now for full margin:

Full margin means that if this position gets liquidated, the remaining money in your account goes down with it.

The system will use the remaining funds in your account to 'extend the life' of the current position, until the entire account can no longer sustain and is then cleared all at once.

It sounds like it has a 'higher fault tolerance', but the risk is also greater.

Many people have the illusion that they can withstand full margin, but when a significant volatility hits, everything can get wiped out all at once. This is especially true for those who like to hold positions without setting stop-losses; full margin is almost a time bomb.

So how should you choose?

If you are still familiarizing yourself with the market or just starting to try trading contracts, prioritize using isolated margin, as this is the most direct way to protect your principal.

Once you have your own trading system and can consistently implement risk control, you can consider using full margin to improve efficiency—but even then, you must set a stop-loss.

Ultimately, the essence of trading contracts is not about making quick money, but about being able to last longer and walk steadily.

Don’t treat your account like a casino; if you don't even know where the risks come from and dare to place heavy bets, that’s not trading, it’s gambling with your life.

Full margin and isolated margin are not about which is superior, but rather about whether you have the ability to handle them.

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