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Users who understand contract trading know that when opening a contract position, margin needs to be added. This margin is used and locked in the position. There are two concepts of margin: initial margin and maintenance margin. The initial margin refers to the margin required when opening a position, while the maintenance margin is the minimum margin level needed to maintain the current position.

Currently, the margin model for contracts is divided into two types: full position and cross position.

In the full position model, all available balance in the user's contract account can be used as margin for the current position. When the position margin decreases to the maintenance margin level, the system will automatically add margin from the available balance in the contract account to reach the initial margin. If the total available margin after the addition still does not reach the maintenance margin level, no further margin will be added, and the liquidation process will be executed. Therefore, when using the full position model, the risks and profits of all positions in the contract account will be calculated collectively, and liquidation will only occur when the position losses exceed the contract account balance.

In the cross position model, the user's position margin is only used for the current position. Unless the user manually adds margin, the system will not add any. When the position cannot reach the maintenance margin level, the system will execute the liquidation process. Therefore, in the cross position model, the user will only lose the margin of the current position during liquidation; that is to say, the amount of position margin is the user's maximum loss, which will not affect other funds in the contract account.

Let’s illustrate with an example:

Users A and B both have 2000 USDT in their contract accounts. They both put out 1000 USDT to go long on BTC/USDT contracts with 10x leverage, where A uses the cross position model and B uses the full position model, with an initial margin of 1000 USDT:

Assuming the BTC price drops to the liquidation price, user A loses 1000 USDT in margin and is forcibly liquidated, thus incurring a loss of 1000 USDT, and the contract account still has 1000 USDT left. However, B using the full position model loses 1000 USDT, and the system automatically adds margin, keeping the long position open. If the BTC price rebounds, B may turn the loss into a profit, but if the price continues to fall, B could lose all 2000 USDT in the contract account.

In summary, the advantage of choosing the full position model is that the user's contract account has a strong ability to withstand losses and makes it easier to operate and calculate positions. Although the full position model is relatively less prone to liquidation in low leverage and volatile markets, it could lead to the total loss of all funds in the account if faced with significant market changes or uncontrollable factors preventing trading.

On the other hand, the cross position model requires users to manually add margin and strictly control the distance between the liquidation price and the mark price; otherwise, a single position can easily lead to liquidation and losses.

In CoinEx contract trading, users are generally set to the full position model by default. Both full and cross position models allow for leverage adjustment, with the maximum leverage for both modes being 100 times. However, it is worth noting that when users have pending orders, they cannot switch between full and cross position modes, and they also cannot change leverage if they have pending orders.

How is the position margin calculated?

Here’s a formula for reference:

Position margin = opening value / leverage (i.e., initial margin) + added margin - reduced margin + unrealized profit and loss.

Additionally, the risk of liquidation is calculated based on the position margin and the current position's required maintenance margin. A higher value indicates a higher risk. When the risk reaches 70%, the CoinEx platform will issue a liquidation warning; exceeding 100% will trigger the liquidation process.

For cross position, the liquidation risk = maintenance margin / position margin * 100%

The risk of liquidation in full position = maintenance margin / (available balance + position margin) * 100%

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