ONUS Pro adopts two escrow systems: Isolated Margin Mode and Cross Margin Mode
What is Isolated Margin?
In Isolated margin mode, margin is placed on a position that will be segregated from the trader's account balance. This mode allows traders to manage their risk accordingly as the maximum amount a trader will lose from liquidation is limited to the position margin set for that open position.
Trader A opens a long 15 BTC with BTCUSDT contracts at USD 10,000 using 3x leverage, using isolated margin. The required initial deposit will be 50,000 USDT. In the event that this position of A is liquidated, A will lose only 50,000 USDT of initial deposit (excluding fees). This allows traders to control as well as limit the risk to their account.
What Is Cross Margin?
Cross margin mode uses the full available balance of the trader in the respective trading pair to prevent liquidation from occurring. When the equity is lower than the maintenance margin, the position will be liquidated. In case of liquidation, the trader will lose all his equity for that trading pair.
Trader B opens a position with the BTCUSDT trading pair. When this position is liquidated, B's entire USDT balance will be forfeited. The balance of other tokens (BTC, ETH, etc.) will not be affected.
Are Cross Margin and Isolated Margin interchangeable when a trader opens a position?
As mentioned above, Cross margin will be the default mode for ONUS Pro customers. However, traders can always change the mode during the calculation and open positions. Any margin changes made will affect the liquidation price of the position. Therefore, calculate carefully before opening a position to avoid the risk of liquidation.
Does changing leverage ratio affect initial margin, maintenance margin and possibility of liquidation?
Let's take a look at the number of positions that can be opened with different leverage multiples. Take BTCUSDT as an example:
Trader chooses Cross Margin mode, the amount used for initial deposit is 1000 USDT. The number of contracts that can be executed with leverage x100, x50, x10 at the price of USD 30,000 is as follows:
Leverage x100: 1000*100/30000 = 3,333 BTC
Leverage x50: 1000*50/30000 = 1,666 BTC
Leverage x10: 1000*10/30000 = 0,333 BTC
With the above example, we can see that the lower the leverage used, the smaller the size of the position that can be opened (with the same initial margin). At the same time, the possibility of being liquidated (with the same initial margin) is directly proportional to the leverage that the trader uses. Therefore, choose the leverage ratio wisely.