Cross Margin and Isolated Margin Modes – x.me

The Relationship Between Leverage and Margin

Margin refers to the principal required for you to participate in futures trading when opening a position. Since the contract has the attribute of high leverage, you can trade with a larger finance scale while holding the same amount of principal. Leverage has the characteristic of magnifying profits and losses.

When holding the same position, the higher the leverage, the lower the amount of margin is required, and the higher the risk is.Relatively, the lower the leverage, the greater the amount of margin is required, and the lower the risk is.

There are two margin modes on VOOX: Isolated Margin Mode and Cross Margin Mode.

Cross Margin Mode

In the cross margin mode, all available balance in the corresponding currency is used as margin to maintain a position and avoid liquidation. Under this mode, if the account’s equity is insufficient to meet the maintenance margin requirement, liquidation will be triggered. If the position is liquidated, the trader will lose all assets in the corresponding currency.

In Cross mode, traders can use all their margin for any position, making the use of funds more flexible and efficient. However, since all the margin is used to support all positions, Cross mode may result in the loss of all account funds if there is a significant market move or uncontrollable factors.

For example, John has 100 USDT in his futures account. In Cross mode, he opens a long BTC position with 20x leverage. The estimated liquidation price is 2,000 USDT. When the BTC price drops to 2,000 USDT, John's position will be liquidated, and he will lose all of his 100 USDT.

Isolated Margin Mode

In the isolated margin mode, the margin for a position is separated from the trader’s account balance. In this mode, traders can freely choose the leverage they wish to use. If the position is liquidated, the maximum loss the trader will incur is limited to the margin allocated to that position.

Isolated mode spreads the risk across different positions. The margin for each future is calculated and maintained independently, which can reduce the risk of cross-profit and loss. However, since the margin is managed separately, this may result in lower capital utilization compared to Cross mode.

For example, John has 100 USDT in his futures account. In isolated mode, he uses 10 USDT as margin and opens a long BTC position with 20x leverage. The estimated liquidation price is 10,000 USDT. When the BTC price drops to 10,000 USDT, John's position will be liquidated, and he will lose the 10 USDT margin. The remaining 90 USDT in the account will not be affected.

Comparison of Cross Margin & Isolated Margin Modes

Margin mode	Cross margin	Isolated margin
Margin allocation	All balances in the account serve as a shared margin for all positions	The margins are calculated separately for each position; no impact across positions
Leverage adjustment	Default modeThe leverage can be adjusted dynamically Note: Higher leverage may elevate the position tier	Under certain conditions, you can switch between Cross Margin and Isolated Margin as neededSupports manual leverage adjustments for individual positionsNote: Margin must be added manually
Risk control	Higher risk: losses in one position can affect all positions under an account	Lower risk: losses are limited to the margin of the individual position; risks are isolated
Liquidation	If the total account margin is insufficient, all positions may be liquidated	Only the losing position is liquidated; other positions remain unaffected
Capital efficiency	High: centralized allocation of funds allows for higher leverage	Low: independent margin limits fund reuse, requiring more reserve capital
Cost	The funding fees are calculated across all positions, which may incur hedging costs	The funding fees are calculated independently for each position, ideal for single-direction strategies
Extreme market conditions	In case of sudden price crashes, insufficient total account margin may lead to cascading liquidations of all positions	Only the losing position is liquidated; however, high-leverage positions (e.g., 100X) may face liquidation from as little as a 1% price change
Target traders	1. Experienced traders 2. Arbitrage strategies 3. Hedging strategies	1. Beginners in futures trading 2. Short-term speculators 3. High-leverage traders

Adjusting Margin

Only positions under isolated margin mode can have their margin adjusted. When adjusting the margin for isolated positions:

The maximum margin that can be reduced = Max (Total Isolated Equity - Initial Margin, 0)

The maximum margin that can be added = Available

In cross margin mode, traders cannot adjust the margin. The system will automatically use the maximum leverage allowed under the current risk limit to calculate the initial margin.

Note

Switching margin modes: If there are open or unfilled orders, or holding a position, you cannot switch between Cross Margin and Isolated Margin modes, nor can you adjust the leverage.
The leverage will not affect the unrealized PNL. When the leverage of the position is adjusted, the amount of initial margin will change accordingly, but the number of positions will remain unchanged. As mentioned above, the advantages of high leverage is that you can open a larger number of contracts with the same margin amount. Therefore, the unrealized PNL will increase due to the increase in the number of contract.

Summary

In summary, VOOX caters to the varied requirements of traders seeking efficient, flexible, and secure futures trading. This is achieved by offering a range of futures options, flexible margin modes, high leverages, among other features.

Risk Disclaimer

Cryptocurrency prices are subject to high market risk and price volatility. You should only invest in products that you are familiar with and where you understand the associated risks. You should carefully consider your investment experience, financial situation, investment objectives and risk tolerance and consult an independent financial adviser prior to making any investment. This material is for reference only and should not be construed as financial advice. Past performance is not a reliable indicator of future performance. The value of your investment can go down as well as up, and you may not get back the amount you invested. You are solely responsible for your investment decisions. VOOX is not responsible for any losses you may incur.

VOOX attaches great importance to compliance and has strictly abided by local regulations. Please obey local laws and regulations in your country or region. VOOX reserves the right in its sole discretion to amend, change, or cancel this announcement at any time and for any reason without prior notice.