Crypto Futures Margin, Leverage, and Cross Versus Isolated Modes
Summary
The guide explains how margin enables leveraged futures positions, defining initial margin as the collateral needed to open a position and maintenance margin as the minimum account value needed to keep it open. If equity falls below the maintenance threshold, a margin call or liquidation may follow. It also describes available, variation, and risk margin, and notes that requirements can include estimated closing fees and vary with current mark prices and platform rules.
The article contrasts isolated margin, where collateral is ring-fenced for a position, with cross margin, where multiple positions share a balance. Isolated mode can limit losses to allocated collateral, while cross mode can use capital more efficiently but exposes the shared account to liquidation risk. The guide gives leverage examples and discusses offsetting opposite positions under one platform’s margin system. Leverage magnifies losses as well as gains, and the article’s platform-specific descriptions and promotional claims should not be treated as universal rules; traders need to check current contract specifications and risk terms.
Key ideas
- Initial margin funds entry into a leveraged position, while maintenance margin governs whether it can remain open.
- A drop below the maintenance threshold can trigger liquidation.
- Isolated margin confines collateral exposure to a position, while cross margin shares collateral across positions.
- Leverage increases both potential gains and potential losses.
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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.