In the derivatives market, margin is the amount required to buy or sell margin positions.
Cross Position Margin
The positions share the margin. One position of a contract will withdraw more deposit when necessary to avoid being liquidated.
Fixed Position Margin
The margin allocated to a contract position is fixed. If the margin falls down to the maintenance level, the position will be liquidated. Traders can add or decrease the margin of the position manually.
Independent Margin Accounts
Different margin coins belong to different margin account and they are all independent from each other. For example, the BTC margin account is separated from the USDT margin account.
1. Cross Position Margin
Cross position margin means that all your account balance will be used to avoid liquidation. Any other realized profit of a position can be used to help add margin to the lost position.
This method is good for investors who want to hedge the already opened contracts, and also applies to speculators who do not want to expose one of their positions to risks due to liquidation.
Please be noted that the initial settings of all positions are “Cross Position Margin” by default.
2. Fixed Position Margin
The biggest loss is limited to the initial margin under this mode. When one position is being liquidated, any of your balance will not be used to add a margin to the position.
Fixed position margin is advantageous to the speculative positions. By isolating the margin of a position, your loss of the particular position will be limited to the initial margin, which will help you once your short-term speculation strategy fails.
In a volatile market, the highly leveraged position might lose the margin very quickly. However, please be noted that although the goal of Hoo is to avoid liquidation as much as possible, the highly leveraged positions are more likely to get liquidated in a volatile market. For instance, a 50x leveraged position will be liquidated when the market goes in the opposite direction for just 2%.
While using fixed margin position mode, you can change your leverage level at any time.
Set and Change Fixed Position Margin
Cross position margin will be enabled by default.
Users can enable the fixed position margin through the leverage slide on the left side of the trading dashboard. The leverage level will be increased if your move the sliding bar to the right, and less margin will be used for this position.
Please be aware that the leverage choice will be saved even though it has been liquidated.
When fixed position margin is employed, the margin of the position is changeable, which allows you to select a leverage price and liquidation price. The liquidation price will be displayed in the options of unliquidated positions and will be updated according to the leverage level.
Fixed Position Margin and Mark Price
In an extremely volatile bear or bull market, the market might trade at a price that is far away from the reasonable price temporarily.
If the price you bought/sold is far from the mark price, you will see the unrealized loss right after opening a position. But it does not necessarily mean that you have lost your money.
The wise way is to pay close attention to the liquidation price and avoid using highest leveraged fixed position margin. Otherwise your position will be liquidated soon after you opened a position.
Cross / Fixed position switch
Change the leverage and amount of the cross position margin
Dec. 19, 2019