📚 On-chain Class ⑩: In a Wave of Liquidations, First Understand “Isolated vs. Cross Margin”
The market went into another flash-crash last night: $BTC briefly fell below 81,000, and $ETH once again lost 2,400. Around $750 million worth of positions were liquidated across the market in 24 hours, wiping out countless highly leveraged longs overnight. People in the comments always ask: “Why did the person next to me survive, while I got liquidated?” The answer may lie in the “isolated/cross margin” mode you choose before opening a position.
A quick explainer:
• Isolated margin: A fixed amount of margin is allocated only to this position. If it’s liquidated, you can lose at most the amount allocated to it, without affecting the rest of your account. Suitable for beginners and exploratory trades.
• Cross margin: All the margin in your account is shared. When a position is at risk, margin is automatically “siphoned” in to support it, offering greater resistance to volatility. But if liquidation occurs, the entire account balance could be wiped out.
Three practical tips:
1️⃣ Beginners should use isolated margin by default and decide in advance, “What’s the most I’m willing to lose on this trade?”
2️⃣ Cross margin is no get-out-of-jail-free card: In extreme volatility, the maintenance margin ratio can deteriorate rapidly. “Sharing” margin can instead mean all your funds go down together.
3️⃣ Whichever mode you use, high leverage + stubbornly holding an unrealized loss = a reservation for liquidation. When the funding rate turns positive and open interest (OI) surges, it’s often a sign that both sides may get caught in a double liquidation.
After today’s sell-off, would you use isolated margin to protect yourself, or cross margin to bet on a rebound?
#比特币 #以太坊 #FuturesTradingTutorial
⚠️ Personal opinion only. DYOR and be mindful of the risks.
The market went into another flash-crash last night: $BTC briefly fell below 81,000, and $ETH once again lost 2,400. Around $750 million worth of positions were liquidated across the market in 24 hours, wiping out countless highly leveraged longs overnight. People in the comments always ask: “Why did the person next to me survive, while I got liquidated?” The answer may lie in the “isolated/cross margin” mode you choose before opening a position.
A quick explainer:
• Isolated margin: A fixed amount of margin is allocated only to this position. If it’s liquidated, you can lose at most the amount allocated to it, without affecting the rest of your account. Suitable for beginners and exploratory trades.
• Cross margin: All the margin in your account is shared. When a position is at risk, margin is automatically “siphoned” in to support it, offering greater resistance to volatility. But if liquidation occurs, the entire account balance could be wiped out.
Three practical tips:
1️⃣ Beginners should use isolated margin by default and decide in advance, “What’s the most I’m willing to lose on this trade?”
2️⃣ Cross margin is no get-out-of-jail-free card: In extreme volatility, the maintenance margin ratio can deteriorate rapidly. “Sharing” margin can instead mean all your funds go down together.
3️⃣ Whichever mode you use, high leverage + stubbornly holding an unrealized loss = a reservation for liquidation. When the funding rate turns positive and open interest (OI) surges, it’s often a sign that both sides may get caught in a double liquidation.
After today’s sell-off, would you use isolated margin to protect yourself, or cross margin to bet on a rebound?
#比特币 #以太坊 #FuturesTradingTutorial
⚠️ Personal opinion only. DYOR and be mindful of the risks.