Many people trade contracts, and when asked "Are you using full margin or isolated margin?" the other party looks confused.
Even worse, some people don’t even understand the difference between these two and directly open leveraged positions, resulting in liquidation without knowing how it happened.
Today’s article will not be filled with jargon; it will clearly explain these two modes. After reading, you can decide how to choose.
First, let’s talk about isolated margin:
Isolated margin means that whatever amount you invest in this contract, that’s the maximum you can lose.
For example, if you have 5000 USDT in your account and you use only 500 USDT for this trade, then even if the market goes against you, you will only lose that 500 USDT, and it won’t drag down your entire account.
Who is it suitable for? It’s suitable for those who want to control risk and prefer a steady approach.
You can treat each trade as an independent battle, and you won’t lose your entire position because of one mistake.
Now let’s talk about full margin:
Full margin means that if this position gets liquidated, all the remaining money in your account goes down with it.
The system will use the remaining funds in your account to keep the current position alive until the entire account can no longer support it, at which point it will be cleared all at once.
It sounds like it has a "higher tolerance for error," but the risk is also greater.
Many people have the illusion with full margin that they can withstand it, but when there’s a big fluctuation, everything gets liquidated at once. Especially for those who like to hold positions and do not set stop-loss orders, full margin is almost a ticking time bomb.
So how should one choose?
If you are still familiarizing yourself with the market or just starting to try contracts, prioritize using isolated margin; this is the most direct way to protect your principal.
Once you have your own trading system and can execute risk control consistently, then consider using full margin to improve efficiency— but even then, you must set stop-loss orders.
Ultimately, the essence of trading contracts is not to make quick money, but to enable you to endure longer and proceed steadily.
Don’t treat your account as a casino; if you don’t even understand 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 whether you have the ability to manage them.
In this round of market conditions, whether you can recover your funds depends entirely on yourself. Start planning with me early, so you can come out of the low point sooner.
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