Understanding isolated and cross margin in crypto exchanges

Margin trading is a method of trading crypto using funds provided by the exchange. Margin accounts, as opposed to standard trading accounts, allow traders to access higher amounts of capital, enabling them to leverage their positions. Essentially, margin trading amplifies the effects of trading so that traders can make larger profits on successful trades. This ability to extend the outcomes of trading makes margin trading particularly common in cryptocurrency markets. 

The margin refers to the total amount required to reach a leveraged position in the derivatives space. Initial and Maintenance Margin corresponds to the minimum initial amount required to enter a position, and the minimum amount necessary to prevent the position from being liquidated.

Since different users have differing trading strategies, exchanges mainly use two different tools of margining:

  • Cross Margin: Share your margin balance across all open positions to avoid liquidation. In the event of liquidation, you risk losing your full margin balance along with any remaining open positions.
  • Isolated Margin: Manage your risk on individual positions by restricting the amount of margin allocated to each. If the margin ratio of a position reached 100%, the position will be liquidated. Margin can be added or removed to positions using this mode.

 

Adjusting Margin on Binance Futures for NapBots

1. On your Binance Dashboard, click on Derivatives :

2. Choose your margin method and please select the Cross Margin mode.

 

temp1212121nip.png

 

mceclip1.png

3. After choosing your margin method, adjust your leverage manually to 2x to pay less trading fees:

tem123psnip.png

mceclip0.png

Click confirm and now your account will be perfectly configured.

Was this article helpful?
0 out of 0 found this helpful

Comments

0 comments

Please sign in to leave a comment.