What is the difference between full position and isolated position in the currency circle?

The key differences between cross margin and isolated margin models are position calculation, risk management, forced liquidation and leverage use. The cross margin mode uses all account funds as margin and faces the risk of all funds, while the isolated margin mode only uses the funds of a specific trading pair and has more limited risks. Additionally, Cross Margin mode allows for higher leverage, while the leverage of Isolated Margin mode depends on the funding of the trading pair. Traders should choose a pattern based on their risk tolerance and trading strategy.

The difference between cross margin and isolated margin

In cryptocurrency trading, cross margin and isolated margin are two different trading modes, and there are several key differences between them:

1. Position Calculate

• Cross Position: Calculate the position size using all available funds in the account as margin. This means that if a trader has 1 BTC and opens a short position with 10x leverage, the position size is 10 BTC.
• Isolated: Calculate position size using only available funds in a specific trading pair as margin. This means that if a trader has 1 BTC in the BTC/USDT trading pair and opens a short position with 10x leverage, the position size is only 1 BTC.

2. Risk Management

• Cross Margin: All funds in the account are subject to risk. This means that if a trader loses money on a short position, they risk losing all the funds in their account.
• Isolated Margin: Risk is limited to the funds available in a specific trading pair. This means that even if a trader loses money on one trading pair, their other funds remain unaffected.

3. Forced liquidation

• Full position: If the available funds in the account are lower than the maintenance margin requirement, forced liquidation will be triggered, causing all positions to be forced to close.
• Isolated position: Force liquidation will only be triggered when the available funds for a specific trading pair fall below its maintenance margin requirement. Therefore, positions on other trading pairs will not be affected.

4. Leverage usage

• Cross Margin:Since all funds in the account are used as margin, higher leverage can be obtained.
• Isolated Margin: Leverage limits depend on the funds available for a specific trading pair.

Which mode to choose?

Cross margin and isolated margin models each have their own advantages and disadvantages. Which mode to choose depends on the trader's risk tolerance and trading strategy.

• Cross Margin: For traders with a high risk tolerance who can achieve higher return potential through higher leverage.
• Isolated Margin: Suitable for traders with lower risk tolerance, it can better manage risks and prevent large losses.

Traders should carefully consider their risk appetite and trading objectives before selecting a pattern.

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