Margin, Isolated and Cross-Margin
Margin: A part of the total position value that belongs to the trader.
In traditional finance, Margin refers to an amount of money used as collateral for borrow money from a brokerage and purchase an investment. In cryptocurrency trading on BTCMEX, the total position value consists of two parts – Margin and Leverage, where Margin is the amount used as collateral by the trader, while Leverage is the multiplier used to that Margin to open a larger position.
Initial Margin is the percentage of the open position value used as collateral and held by a user at the beginning. It is calculated as: The number of Perpetual Contracts divided by the Order Price multiplied by Leverage.
For example, if a trader buys 1000 contracts at the BTC/USD price 7000 and 10x Leverage, his Initial Margin would be: 1000/(7000×10)=0,014.
On BTCMEX the Initial Margin is calculated in Bitcoin, which means, for the example above to open the position the trader is investing 0,014 BTC.
You can add or remove Margin in the open position settings, but it won’t change the whole position value. Adding Margin will reduce the Leverage and push away the Liquidation Price. Removing Margin will increase the Leverage and move the Liquidation Price closer to the Mark Price – the trigger for Liquidation.
On BTCMEX there is Cross-Margin – a function to use the entire Available Margin to open a position. Selecting Isolated Margin a trader can choose the Initial Margin he would use with which Leverage and the position value.
A trader can select Isolated or Cross-Margin while placing an order.
By default, all positions are initially set to Cross Margin. Users enable the Isolated Margin on the order control panel at the left side of the Trading Dashboard using the leverage slider. The further to the right you move the slider, the higher the Leverage and the less margin is used for the position.