In this margin deep dive: cross margin vs isolated article article I went over an explanation of how margin is used in different ways. I also hinted that these mechanics tend to shine the most with Coin-M Futures. So lets dive further into the margin modes by using this instrument as an example
What are Coin-M Futures?
Coin-Margined Futures is a unique trading method launched by Bitget. Unlike the traditional trading method that only applies to corresponding coins, Coin-Margined Futures supports multiple currencies as a margin for multiple futures trading pairs. For example: using ETH as a margin, you now can trade BTCUSD, ETHUSD, EOSUSD with profit and loss will be calculated in ETH. The feature allows you to have more trading options, effectively increase the utilization rate of funds, and enjoy both trading interests and price rises. But what is even better is that Coin-M futures allow the different margin modes to be utilized to its full potential
Fundamentally isolated works the same as with any other instrument. In this mode, only your allocated funds to the specific trade is at risk. The big upside by doing this in Coin-M futures is that you can actually use a different asset as margin to trade a different asset. This can save you transfer and withdrawal fees.
Example: Lets say you want to trade Bitcoin, but you only have ETH in your account. By trading Coin-M futures there is no need to convert your ETH in BTC in order to trade.You can simply open up the position and as per the figure below you can select the asset which you would like to use as margin.
Upon settlement, the realized profit or loss from the BTC trade will automatically be converted and deposited back into your ETH account. This is a great way to increase your ETH balance by trading other pairs.
Trading on Cross margin utilizes your entire account balance, effectively creating a joint pool of funds across all different assets you may hold in your account. This means that regardless of your individual asset holdings, your margin will be calculated on your total account balance allocated in your Coin-M Futures wallet.
Example: You wish to trade bitcoin, and you are holding BTC, ETH and BGB in your account. When using Cross, the combined value of those three assets will be used as margin. Upon settlement, the realized profit of loss from the BTC trade will now be converted and deposited back in your selected margin account as seen in fig1.
Liquidation and risk:
While both margin options provide great benefits if used correctly, it is important to do your own research before attempting to trade. In the event of using extreme leverage, keep in mind that the liquidation price draws closer, and might sit at an unfavorable place. Therefore use margin wisely, and never take excessive risk without having a proper plan. Once liquidated the loss of your funds is permanent.
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The information provided above is not financial advice but for educational and entertainment purposes. Please do your own due diligence or consult a financial advisor before investing in any digital assets.
All opinions expressed on Bitget’s Soapbox (also known as the ‘Soapbox’) are opinions of individual traders using the Bitget platform, and do not reflect the opinions of Bitget or its affiliate companies and partners. The Soapbox author’s opinions are based upon information they confirm to be reliable, but neither Bitget nor its affiliates warrant its complete accuracy, and it should not be relied upon as such.