About Isolated and Cross Margin
In derivatives, margin refers to the amount required to buy or sell leveraged positions. Initial and maintenance margins refer to the minimum amount of margin required to open a position and the minimum amount of margin required to maintain this position, respectively. Since different users have different trading strategies, BitMEX adopts two different methods of margin mechanism:
- Cross Margin:
- Margin is shared between open positions with the same settlement cryptocurrency. When needed, a position will draw more margin from the corresponding cryptocurrency total account balance to avoid liquidation.
- Isolated Margin:
- The margin allocated to a position is limited to a certain amount. If the margin of a position falls below the maintenance margin level, the position will be liquidated. Under this method, you can still increase or decrease the margin for this position.
Cross Margin on BitMEX
Cross margin, also known as “Spread margin”, is a margin method that uses all the funds in the available balance of the relevant cryptocurrency to avoid forced liquidation of positions in the same settlement cryptocurrency. Any realized profit or loss from other positions can help increase margin on losing positions using the same settlement cryptocurrency.
This method is useful for investors who are hedging an existing position, and it is also suitable for arbitrageurs who do not want to expose one side of their position to risk due to liquidation.
Portfolio Margin on BitMEX
BitMEX does not provide portfolio margin. Unrealized gains may not be used to offset unrealized losses or as margin for opening new positions. This is especially important for traders who intend to trade spreads between two derivative contracts on the same underlying. You must close a position to realize a gain, which can be used to offset a loss on another contract.
Isolated margin on BitMEX|
In this mode, your maximum loss is limited to the starting margin used. When a position is liquidated, any of your available balance will not be used to increase the margin on that position.
Isolated margin is useful for speculative positions. By segregating the margin used on a position, you can limit your losses on that position to the initial margin amount, helping you when your short-term speculative trading strategy fails. In volatile markets, a highly leveraged position can quickly lose margin. However, please note that while BitMEX’s goal is to minimize liquidation events, highly leveraged markets are more likely to be liquidated in volatile markets. For example, a position with 50x leverage will be liquidated when the market moves in the opposite direction by 2%.
When using isolated margin, you can adjust your leverage in real time through the leverage slider.
Setting and Adjusting Isolated Margin
By default, cross margin is enabled. Users can enable isolated margin through the leverage slider on the order control on the left side of the trading panel. The further you move the slider to the right, the higher your leverage and the less margin will be used for this position. Please note that the leverage of each contract is saved after it is selected, even if the position is fully closed.
When using isolated margin on a position, the margin amount for this position is adjustable. This allows you to choose a desired leverage and liquidation price. Your liquidation price for this position is displayed in the Open Positions tab and will update as you adjust your leverage.
Isolated Margin and Mark Price
During periods of extreme volatility or significant bull or bear markets, the market may temporarily trade away from the mark .
If you are buying or selling at a price significantly farther from the mark price, you will see an unrealized loss as soon as you open the position. Note, however, that this does not mean that you must lose money. It is wise to pay attention to your liquidation price and avoid using the highest leveraged isolated margin under these market conditions; otherwise, your position may be quickly closed due to the possibility of unrealized losses immediately after opening the position. forced liquidation.