What do the full position and isolated position of a contract mean? Which is better between full position and isolated position?

In cryptocurrency trading, cross margin and isolated margin are two different positioning modes that are used to determine the fund management method used by traders for leveraged trading on the exchange. When investors conduct currency transactions, they can also see the choice of isolated position and cross position. If they want to choose between full position or isolated position of a contract, they must first understand what the full position and isolated position of the contract mean? According to the data, cross margin means that all account funds are used as margin and are shared by multiple contract positions, while isolated margin means that each account calculates margin separately, and profits and losses do not affect each other. The editor below will tell you in detail.

What do the full position and isolated position of a contract mean?

Cross position and isolated position are two different positioning modes. Contract trading refers to a type of financial derivatives transaction in the cryptocurrency market, allowing traders to trade based on changes in cryptocurrency prices, thereby Get profit. This form of trading often involves the use of leverage, allowing traders to control larger amounts of cryptocurrency with less capital, thereby amplifying gains or losses.

In cross margin mode, a trader’s entire account balance is used as margin to support leveraged trading for all of his positions. This means that all positions share a total margin pool. If a transaction generates a loss, the exchange will deduct funds from the total margin pool until the liquidation line is reached. At this time, the exchange may perform forced liquidation operations to reduce risks.

In the isolated margin mode, traders can set margins separately for each transaction, and the margins for each transaction are independent of each other. This means that each position has an independent margin pool to support leveraged trading without affecting other positions. If a transaction generates a loss, only the margin pool of that transaction will be affected, but not other transactions.

Which one is better between full position and isolated position?

Choosing to use the full position or isolated position mode depends on the investor's trading strategy, risk tolerance and fund management preferences. Cross positioning provides a higher leverage ratio because the entire account balance can be used as margin, allowing larger trades to be conducted with the same funds. Management is simple as all positions share a total margin pool.

But cross position risk is greater because the entire account balance is exposed to each transaction. Vulnerable to overall market fluctuations, which may lead to increased risk of liquidation.

The applicable situation of full position is for short-term, high-risk trading strategies, or for traders who are confident of achieving high returns in a relatively short period of time.

Isolated positions provide better risk control because the margin of each transaction is managed independently, and the loss of one transaction will not affect other transactions. More suitable for long-term holding or more conservative trading strategies, which can manage risks more carefully.

The leverage ratio of isolated positions is lower because the margin of each transaction is independent of each other and more funds are required to conduct transactions of the same size. Management is relatively complex and requires more attention to the margin level and risk profile of each transaction.

The usage of isolated positions is for traders who pay more attention to risk control and fund management, or investors who hold Bitcoin for a long time.

In short, the full position mode in contract trading is relatively difficult to liquidate under low leverage and volatile market conditions. However, when encountering major market conditions, or some uncontrollable factors prevent trading, it is very likely that all funds in the account will return to zero. . The isolated position mode is more flexible than the cross position mode, but the distance between the liquidation price and the mark price needs to be strictly controlled, otherwise a single position can easily be liquidated and cause losses, so the two methods are different, and for investors The profits brought about are also different.

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