The difference between isolated and cross-margin contracts;

Super detailed explanation! Even a novice can understand it easily!

Isolated contracts: independent margin mode

Isolated contracts mean that each transaction has its margin calculated independently. In simple terms, when you open an isolated contract, only the margin occupied by the transaction is at risk. Even if market fluctuations cause the transaction to blow up, it will only affect the margin of this transaction, and will not affect other funds in your account.

For example, if you have 2000u in your account and use 1000u to open an isolated contract, when market changes cause the contract to blow up, you will only lose the 1000u, and the remaining 1000u in the account will be safe.

Full-margin contracts: shared margin mode

In contrast, full-margin contracts use a different margin mechanism. In the cross-margin mode, your entire account balance is considered as margin. This means that if you open multiple cross-margin contracts at the same time, they will share the same margin pool.

The advantage of this model is that you can get higher returns when the market moves in your favor. However, the risk also increases. If the market changes are not favorable for your trading, it may cause the margin of the entire account to be consumed quickly, and may even trigger the liquidation of the entire account.

For example, if you open three full-position contracts in a 2000u account at the same time, each contract takes up a part of the margin. When market changes cause any contract to be close to liquidation, it will affect the margin level of the entire account. If the margin is not enough to support all contracts, it may lead to the liquidation of the entire account.

Risk control: operate cautiously and allocate funds reasonably

After understanding the difference between position-by-position and full-position contracts, novice investors should pay more attention to risk control. First of all, it is not recommended for novices to try contract trading easily unless you already have a deep understanding of the spot market. Secondly, if you decide to try contract trading, be sure to operate cautiously, allocate funds reasonably, and avoid excessive leverage and over-trading.

Want to understand the secrets of making money in the crypto market? Click on my homepage to view the introduction, everything is under control!

#热门话题 #pepe⚡ #solana生态 #meme板块关注热点