When opening a futures position, you'll be asked to choose between “isolated margin” and “cross margin.” Many beginners just pick one at random and end up taking a big loss.
【Cross Margin】All the balance in your account is used as margin. Advantage: the liquidation price is farther away, so you're less likely to get liquidated;
Disadvantage: in extreme market conditions, your losses could wipe out your entire account. It's like putting all your eggs in one
propping one another up in the basket.
【Isolated Margin】Only a specified amount of money is allocated to this position. If it gets liquidated, you can lose at most that amount,
and the losses won't spread to your other positions or principal. The risk is kept inside a cage.
【My recommendation】Beginners should always use isolated margin. The reason is simple: you aren't yet able to assess the worst-case scenario of a bad trade
How much did you lose? Then use the system to lock in the maximum loss. Once you’ve learned position management and achieved stable profits for three consecutive,
months, then consider going all-in—there’s still time. In the market, lasting longer matters a hundred times more than getting rich quickly.
What do you think? Share your experience in the comments.