A certain amount of margin is required in order to participate in the contracts of the platform. Margin trading also makes your contract have greater leverage.
you need to focus on the following aspects in margin trading process:
- Initial margin: the minimum margin amount required to be paid by the trader when opening a position. At the same time, initial margin ratio (position value at opening time / margin for position) also shows your leverage ratio.
- Initial margin is generally 1% of position value at opening time. It will rise with risk limit when the position becomes too big.
- Maintain margin: the minimum margin required to maintain position. When margin amount is lower than such proportion, forced liquidation event or partial forced liquidation event will be triggered.
- Maintenance margin is 0.5% of position value at opening time. It will rise with risk limit when the position becomes too big.
- Position-opening cost: the total frozen assets required for the trader to open a position, including the initial margin required for opening a position and possible fees.
- Actual leverage ratio: the current position includes the leverage ratio of unrealized profit/loss.
Cross Margin Trading
Cross margin, also known as “spread margin”, refers to all available balances of the contractual account as margin to avoid forced liquidation. The profit that has been realized by any other position can be used to add margin to losing position. That is, margin is shared among positions. When necessary, a contractual position will call more margins from account balance to avoid close-out.
Independent Margin Trading
Independent margin refers to that the margin allocated for a position at opening time is controlled within a certain amount. If the margin for the position is lower than maintenance margin level, the position will be liquidated forcibly. Through independent margin mode, you can limit your maximum loss to the initial margin used for the position.
Please note that you may experience forced liquidation faster due to insufficient margin under turbulent market conditions. When a position is liquidated forcibly, any of your available balance will not be used to increase the margin for the position.
Independent Margin and Marked Price
Trading may be temporarily carried out at a price far away from marked price in case of extremely fluctuating or significant bull or bear market.
If your selling/buying price is significantly far away from marked price, you will immediately see unrealized loss at the time of opening a position.
But please note that this does not mean that you are losing money. It is advisable for you to pay attention to your forced liquidation price and avoid using independent margin with the highest leverage; otherwise, this may cause unrealized loss after your open a position and your position may be liquidated forcibly very quickly.