The difference between Isolated Margin and Cross Margin

Content of this article：

What is Isolated Margin mode?

What is Cross Margin mode?

How to switch between cross margin / isolated margin mode

Are cross margin and isolated margin interchangeable when having an open position?

There are two margin modes on XT: Isolated margin mode and Cross margin mode. 

What is Isolated Margin mode?

The isolated margin mode depicts the margin placed into a position is isolated from the trader's account balance. This mode allows traders to manage their risks accordingly as the maximum amount a trader would lose from liquidation is limited to the position margin placed for that open position.

For example, a trader opens a 1500 BTCUSD position at $10,000 by using 1x leverage. The initial margin used to open the position is 0.15 BTC. Now, the trader changes the leverage to 3x. The initial margin required (collateral) will then change from 0.15 BTC to only 0.05 BTC. In the event of liquidation, the trader will only lose the 0.05 BTC initial margin (excluding fees). This allows the trader to limit their risk.

 

What is Cross Margin mode?

Cross Margin mode is the default margin mode on XT. Cross margin mode uses all of a trader’s available balance within the corresponding trading pair coin type to prevent liquidation. When the trading pair's equity is lower than the maintenance margin, the position will be liquidated. In the event of liquidation, the trader will lose all his/her equity for that particular trading pair. 

For example, a trader opens a BTCUSDT position. When the BTCUSDT position is liquidated, the trader will lose all of their USDT balance. The BTC balance will not be affected. 

How to switch between cross margin / isolated margin mode?

Visit the contract trading screen and click on cross margin / isolated margin in the top right corner of the screen.

Can I switch between Cross Margin and Isolated Margin while holding positions?

No. Since Cross Margin and Isolated Margin use different margin calculation mechanisms and liquidation price calculations, switching margin modes while holding positions or having open orders is not supported. This restriction is in place to protect your assets and avoid abnormal forced liquidation caused by margin mode changes.

 

To switch the margin mode, please first cancel all open orders for the trading pair, including limit orders, stop-loss orders, take-profit orders, and other pending orders, and then close your current position. Once there are no open positions or open orders for the trading pair, you can switch the margin mode successfully.