- What is Margin?
Margin is the required capital for contract trading to maintain positions, which is mainly divided into:
• Initial Margin: The minimum amount required to open a position.
• Maintenance Margin: The minimum amount required to maintain a position. If the balance falls below this level, forced liquidation will be triggered.
- What is Cross Margin Mode?
• All available balance in the account can be used as margin for current positions.
• If a position incurs losses to the maintenance margin level, the system will automatically add margin from the account balance to prevent liquidation.
• If the account balance is insufficient, liquidation will be triggered, potentially leading to total loss of funds.
- What is Isolated Margin Mode?
• Each position has independent margin calculation and will not affect other positions.
• Unless the user manually adds margin, the system will not automatically allocate additional margin.
• If the position margin falls below the maintenance margin, the system will force liquidation, but other funds in the account will remain unaffected.
- What is the Difference Between Cross and Isolated Margin Modes?
| Mode | Capital Utilization | Risk Management | Applicable Scenarios |
| Cross Margin Mode | Shared account balance, improves capital efficiency | Overall account losses may be larger | Suitable for low-leverage trading or ranging markets |
| Isolated Margin Mode | Independent funds, controlled losses | Losses are limited to a single position | Suitable for high-leverage trading to control maximum losses |
- How to Switch Between “Isolated Margin Mode” and “Cross Margin Mode”?
• Click and select “Isolated/Cross” at the top right of the contract page.
- How to Adjust Margin in Isolated Margin Mode?
• To increase or decrease the margin of an isolated position, click the pencil icon on the current position and manually adjust the margin.
- Case Study: Cross Margin vs. Isolated Margin
Scenario:
• Suppose User A and User B both have 2000 USDT in their HedgerX contract accounts.
• They both open BTC/USDT long positions with 10x leverage, opening a 1000 USDT position.
| User | Mode | Initial Margin | Leverage | Position Amount |
| A | Isolated Margin | 1000 USDT | 10x | 10,000 USDT |
| B | Cross Margin | 1000 USDT | 10x | 10,000 USDT |
If BTC price drops and triggers liquidation price:
• User A (Isolated Margin Mode): Liquidated after losing 1000 USDT, remaining balance: 1000 USDT.
• User B (Cross Margin Mode): 1000 USDT lost, but the system automatically adds margin from the account balance to maintain the long position. Remaining balance: 1000 USDT.
If BTC price rebounds:
• User A: Already liquidated, no chance of recovery.
• User B: Still holds the position; if BTC price rises to or above the original price, User B could recover losses or make a profit.
If BTC price continues to decline:
• User A: Already liquidated, no further losses.
• User B: Since they used cross margin, they might lose the entire 2000 USDT if the price keeps falling.
- How is Margin Calculated?
Margin Calculation Formula:
Position Margin = (Opening Value ÷ Leverage) + Added Margin - Reduced Margin + Unrealized PnL
Liquidation Risk Calculation:
• Isolated Margin Liquidation Risk = (Maintenance Margin ÷ Position Margin) × 100%
• Cross Margin Liquidation Risk = (Maintenance Margin ÷ (Available Balance + Position Margin)) × 100%
Risk Alerts:
• When liquidation risk reaches 70%, HedgerX sends a liquidation warning notification.
• When risk exceeds 100%, the system will execute liquidation.
- When Should You Use Cross Margin Mode?
• When traders want to maximize the use of their account balance and enhance risk resistance.
• When traders anticipate a market rebound and want to avoid early liquidation.
- When Should You Use Isolated Margin Mode?
• When traders want to limit losses to a single position and prevent it from affecting other funds in the account.
• Recommended for high-leverage trading, as it reduces overall risk in extreme market conditions.
- Can You Switch Between Cross and Isolated Margin Mode?
• Yes, but only if no open positions or pending orders exist.
• No, if there are open positions or active orders, you cannot change the mode or leverage.
- What is the Maximum Leverage for Cross and Isolated Margin?
• Both modes support a maximum leverage of 100x.
- What Happens to Funds After Liquidation?
• Cross Margin Mode:
• If account balance is sufficient, the system automatically adds margin to prevent early liquidation.
• If account balance is insufficient, the position is liquidated, potentially resulting in a total loss of funds.
• Isolated Margin Mode:
• Loss is limited to the current position.
• Other funds in the account remain unaffected.
- Which Margin Mode is Better?
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Disclaimer
HedgerX provides all trading tutorials for educational purposes only and does not constitute financial advice. Contract trading carries high risks, and traders may lose all their funds. Please carefully evaluate the risks and manage funds responsibly.