The cryptocurrency market seems to be the most volatile financial market in the world. However, the powerful volatility opens up the opportunity for the largest amount of profit, as well as risks – crypto derivatives become popular among crypto traders. The best way to mitigate risk and make great profits with derivatives trading is to have a deep understanding of trading tools offered.
The most common trading tools in the cryptocurrency derivatives market are Cross Margin and Isolated Margin trading. Understanding the difference between them can mean the difference between being liquidated, or maintaining an open position until it becomes profitable.
Isolated Margin VS Cross Margin
Isolated margin is the initial margin applied to an open order position. The benefit of isolated margin is that traders can control precisely how much capital they are willing to risk in order to limit potential losses in case the market moves against an open position. In other words, you will only lose the initial margin if the position is being liquidated.
Cross margin is using all of the user’s margin as Available Balance in the trading platform. That is to say, the margin is shared among all the user’s positions. If the position is liquidated, all money in the balance will lose.
Which is More Prone to be Liquidated?
For example, if a trader has 1 BTC available in the balance and invests 0.1 BTC as margin to open a long position with 100x leverage. If the market moves in the opposite direction to your opened position, and you lose 0.05 BTC.
– In Cross Margin mode
The margin rate is (1 BTC – 0.05 BTC)/0.1 BTC * 100% = 950%
– In Isolated Margin mode
The margin rate is (0.1 BTC – 0.05BTC)/0.1 BTC * 100% = 50%.
The higher the margin rate, the longer the position can remain open and profit. Obviously, cross margin trading can keep your money safer.
To conclude it, even trades made with strong conviction that initially appear to be unsuccessful, in cross margin trading, can be held until the market turns around in the trader’s favor.
Get Profits on Bexplus BTC Cross Margin Trading
Bexplus is a cryptocurrency futures exchange registered in Saint Vincent and the Grenadines, which provides 100x leveraged perpetual contracts of BTC, ETH, XRP, EOS and LTC.
On Bexplus, cross margin with 100x leverage is the default trading mode offered to crypto traders. Considering how volatile crypto assets are and how wildly prices can fluctuate intraday, cross margin is a far more reliable and less risky trading method.
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To deposit BTC in the real account, you can earn a 100% BTC bonus, which can also be used to trade futures contracts. The more deposit, the more bonus you will get. You can get up to 10 BTC as bonus!
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