Exploring the margin modes in Futures Trading: Differences between Full Margin and Isolated Margin

In the field of Crypto Assets trading, many traders often feel confused about the two margin modes: full margin and isolated margin. This article will provide a detailed analysis of the characteristics of these two modes and their applicable scenarios.

Full Margin Mode: Sharing Risks and Capital

The full margin mode allows traders to use all available balance in their accounts as Margin. This method effectively reduces the risk of forced liquidation. Especially when using moderate leverage, the possibility of liquidation in full margin mode is relatively low. Therefore, many institutional investors and experienced traders prefer to use the full margin mode for hedging operations.

Isolated Margin Mode: Risk Isolation and Limitation

In contrast, the isolated margin mode allocates a fixed amount of Margin for each position. When the Margin of a certain position is insufficient to cover the floating loss, that position will be forcibly liquidated. This means that in cases of extreme market volatility or when using high leverage, positions under the isolated margin mode are more likely to be forcibly liquidated. However, a significant advantage of the isolated margin mode is that even in the event of forced liquidation, the loss is limited to the Margin of that position and does not affect the balance of the entire account.

In-depth Analysis of Margin Types

The core feature of full margin (also known as cross margin) is that all positions share the same margin pool. This means that the entire balance of the margin account can be used to support individual positions.

The isolated margin (also known as independent margin) establishes a separate margin account for each position. The risk and return of each position are independent from each other, supported by their respective margin balances.

Choose a Margin Mode that Suits You

Based on the above analysis, we can draw the following conclusions:

Full margin leverage trading is usually more suitable for experienced investors or institutions. These users often use it as a hedging tool, utilizing its lower liquidation risk to manage their overall investment portfolio.

In contrast, isolated margin trading is more suitable for novice traders. It helps beginners control the potential losses of each trade within a predictable range, thereby managing risk more effectively.

On mainstream Crypto Assets trading platforms like Gate, users can flexibly choose between full margin or incremental margin modes based on their trading strategies and risk tolerance. Regardless of which mode is chosen, traders should fully understand its characteristics and make informed decisions based on market conditions and personal circumstances.