What are the advantages of using cross margin and isolated margin?

The unified account supports various futures mode, including spot, margin, expiry futures, perpetual futures, and options . The margin modes are divided into isolated margin and cross margin. Each futures mode has its advantages, and you can choose based on your trade needs.

1. Advantages of isolated margin: Position isolation reduces risk.

The margin and profit and loss for each position are calculated separately. The risks and returns of each position are independent, isolating the risk of isolated margin positions from that of cross margin positions. In the event of a liquidation, only the margin for that specific position will be lost, preventing larger losses.

For example, if you have 10 BTC and several other cryptos in your account, and you use the cross margin mode to open a BTC crypto-margined future, all 10 BTC will be used as margin. If you use the isolated margin mode and open a future with 5 BTC, only those 5 BTC are at risk. If your position faces liquidation, you will only lose the 5 BTC, and the other 5 BTC will remain unaffected. Isolated margin can help reduce risk.

2. Advantages of cross margin: Shared margin increases funds utilization.

Under cross margin, positions in futures with the same settlement crypto share margin, and profits and losses offset each other, helping improve capital efficiency.

For example, if you choose the future margin - cross margin mode for trading BTC crypto-margined perpetual futures, and use BTC as margin in the BTC/USDT leverage to open a long position in BTC, then these two positions share the margin and offset each other's profits and losses. If a single position generates BTC earnings, you can make a partial settlement, and the earnings will be credited in real-time, which can then be automatically used as position margin, significantly improving funds utilization.

Note:

1. In the cross margin mode for futures, if there are extreme market conditions and a single crypto position incurs significant losses, the entire account may lose all of that particular crypto.

2. In the futures isolated margin mode, each position operates independently. If an extreme market conditions occurs and a single crypto position incurs significant losses, it will not affect any other crypto in your account or impact other positions.