Isolated margin mode
Introduction
Users can open isolated margin positions in spot and futures, multi-currency and portfolio margin account modes while choosing either base or quote crypto to be used as margin.
Position fields
Term | Explanation | Parameter in Get positions API |
|---|---|---|
Assets | The amount of crypto bought, after deducting trading fees
| pos |
Liability | The amount of crypto borrowed, it includes the borrowed amount as well as interest. | liab |
Margin | Amount of margin used for this position | margin |
Entry price | Average entry price of the position Entry price = (Initial amount * Initial entry price + Additional amount * Filled price) / (Initial amount + Additional amount) | avgPx |
Est. liq. price | Estimated liquidation price of the position In the new isolated margin mode Long position using base crypto as margin Est. liq. price = |liability + interest| * (1 + mmr%) * (1 + taker fee rate) / (assets + margin) Long position using quote crypto as margin Est. liq. price = [|liability + interest| * (1 + mmr%) * (1 + taker fee rate) - margin] / assets Short position using base crypto as margin Est. liq. price = assets / [|liability + interest| * (1 + mmr%) * (1 + taker fee rate) - margin] Short position using quote crypto as margin Est. liq. price = (assets + margin) / [|liability + interest| * (1 + mmr%) * (1 + taker fee rate)] In the old isolated margin mode Long position using base crypto as margin Est. liq. price = |liability + interest| * (1 + mmr%) * (1 + taker fee rate) / assets Short position using quote crypto as margin Est. liq. price = assets / [|liability + interest| * (1 + mmr%) * (1 + taker fee rate)] | liqPx |
Floating PnL | In the new isolated margin mode Long position using base crypto as margin Floating PnL = assets - |liability + interest| / mark price Long position using quote crypto as margin Floating PnL = assets * mark price - |liability + interest| Short position using base crypto as margin Floating PnL = assets / mark price - |liability + interest| Short position using quote crypto as margin Floating PnL = assets - |liability + interest| * mark price In the old isolated margin mode Long position using base crypto as margin Floating PnL = assets - |liability + interest| / mark price - margin Short position using quote crypto as margin Floating PnL = assets - |liability + interest| * mark price - margin | upl |
Floating PnL% | Floating PnL / initial margin | uplRatio |
Trading rules
Opening positions
The assets, liabilities and margin will be reflected in an isolated position. Depending on whether the user has upgraded to the new isolated margin mode, there will be differences in how the positions are displayed. Examples of what positions will look like under these 2 scenarios
Long 1 BTC at 100,000 using 10x leverage
Short 1 BTC at 100,000 using 10x leverage
Using base crypto as margin | Using quote crypto as margin | |
Long | In the old isolated margin mode Assets = 1.1 BTC Liability = -100,000 USDT Margin = 0.1 BTC In the new isolated margin mode Assets = 1 BTC Liability = -100,000 USDT Margin = 0.1 BTC | Assets = 1 BTC Liability = -100,000 USDT Margin = 10,000 USDT |
Short | Assets = 100,000 USDT Liability = -1 BTC Margin = 0.1 BTC | In the old isolated margin mode Assets = 110,000 USDT Liability = -1 BTC Margin = 10,000 USDT In the new isolated margin mode Assets = 100,000 USDT Liability = -1 BTC Margin = 10,000 USDT |
Closing positions
Using base crypto as margin | Using quote crypto as margin | |
Long | Quote liability must be fully repaid | Base assets in the position must be fully sold Note: After selling all the assets in the position, if there is still liability in the position, the margin in the position will be used to offset the liability before closing the position |
Short | Quote assets in the position must be fully sold Note: After selling all the assets in the position, if there is still liability in the position, the margin in the position will be used to offset the liability before closing the position | Base liability must be fully repaid |
Method | Order placed | Scenario and behaviour | Example |
|---|---|---|---|
Placing orders to close out the position on the position panel | Market close all | When liability and margin are the same crypto The system will place an order to sell all the assets. Once the liability has been paid, any additional amount of crypto bought thereafter will be transferred back into the account balance. The position will be closed once all the assets in the position have been sold. When asset and margin are the same crypto The system will calculate how much liability needs to be bought back (inclusive of trading fees) and place an order to buy back the liability. After which, if there are remaining assets in the position, they will be transferred back into the account balance. Note: The liability crypto might be overbought a little due to rounding issues. | When liability and margin are the same crypto Asset = 1 BTC Liability = -100,000 USDT Margin = 10,000 USDT Leverage = 10x Assuming no trading fees, and the price of BTC has risen to 125,000 USDT per BTC, an order to sell 1 BTC will be placed, selling all the assets in the position. When the order is filled, the remaining 25,000 USDT after repaying the liability and 10,000 USDT in margin will be transferred back into the account balance. When asset and margin are the same crypto Asset = 1 BTC Liability = -100,000 USDT Margin = 0.1 BTC Leverage = 10x Assuming no trading fees, and the price of BTC has risen to 125,000 USDT per BTC, an order to sell 0.8 BTC will be placed to buy back 100,000 USDT. The remaining 0.2 BTC in asset and 0.1 BTC in margin will be transferred back into the account balance once the order has been filled. |
Market/Limit order | When liability and margin are the same crypto Users will need to place orders to sell all the remaining assets that are in the positions. Once the liability has been paid, any additional amount of crypto bought thereafter will be transferred back into the account balance. The position will be closed once all the assets in the position have been sold. When asset and margin are the same crypto Users will need to place orders to buy back all the liability in the position. After which, if there are remaining assets in the position, they will be transferred back into the account balance. | When liability and margin are the same crypto Asset = 1 BTC Liability = -100,000 USDT Margin = 10,000 USDT Leverage = 10x Assuming no trading fees, and the price of BTC has dropped to 98,000 USDT per BTC, the user places an order to sell 1 BTC, selling all the assets in the position. When the order is filled, the remaining 2,000 USDT in liability will be offset using the margin in the position and the remaining 8,000 USDT will be transferred back into the account balance When asset and margin are the same crypto Asset = 1 BTC Liability = -100,000 USDT Margin = 0.1 BTC Leverage = 10x Assuming no trading fees, and the price of BTC has dropped to 98,000 USDT per BTC, the user needs to place an order to sell 1.0204 BTC to buy back 100,000 USDT. 0.0204 BTC will be used from the margin and the remaining will be transferred back into the account balance once the order has been filled. | |
Placing orders to close out the position on the order panel | Reduce only | Same as placing a market/limit order via the position panel | - |
Non reduce only | Closing the existing position will be similar to that of placing a reduce only order. Once the position has been closed, the remaining portion of the order that has been filled will be used to open a position in the opposite direction. The margin required for opening the position will be transferred from the account balance. | When liability and margin are the same crypto Asset = 1 BTC Liability = -100,000 USDT Margin = 10,000 USDT Leverage = 10x Assuming no trading fees, and the price of BTC has risen to 125,000 USDT per BTC, the user places an order to sell 2 BTC. When the order is filled, the remaining 25,000 USDT after repaying the liability and 10,000 USDT in margin will be transferred back into the account balance. The remaining 1 BTC that has been sold will then open a position in the opposite direction, with 12,500 USDT being transferred from the account balance into the position as margin. Asset = 125,000 USDT Liability = -1 BTC Margin = 12,500 USDT Leverage = 10x When asset and margin are the same crypto Asset = 1 BTC Liability = -100,000 USDT Margin = 0.1 BTC Leverage = 10x Assuming no trading fees, and the price of BTC has risen to 125,000 USDT per BTC, the user places an order to sell 2 BTC. When the order is filled, the remaining 0.1 BTC in margin will be transferred back into the account balance. The remaining 1.2 BTC that has been sold will then open a position in the opposite direction, with 0.12 BTC being transferred from the account balance into the position as margin. Asset = 150,000 USDT Liability = -1.2 BTC Margin = 0.12 BTC Leverage = 10x |
Risk assessment
Term | Explanation | Parameter in Get positions API |
|---|---|---|
Margin level | Margin level of the position In the new isolated margin mode Long position using base crypto as margin Margin level = (assets + margin - |liability + interest| / mark price) / (mmr + liquidation fee) Long position using quote crypto as margin Margin level = (assets * mark price + margin - |liability + interest|) / (mmr + liquidation fee) Short position using base crypto as margin Margin level = (assets / mark price + margin - |liability + interest|) / (mmr + liquidation fee) Short position using quote crypto as margin Margin level = (assets + margin - |liability + interest| * mark price) / (mmr + liquidation fee) In the old isolated margin mode Long position using base crypto as margin Margin level = (assets - |liability + interest| / mark price) / (mmr + liquidation fee) Short position using quote crypto as margin Margin level = (assets - |liability + interest| * mark price) / (mmr + liquidation fee) | mgnRatio |
Maintenance margin requirement (mmr) | |liability + interest| * mmr% | mmr |
Order cancellation assessment
To prevent liquidation, our system assesses whether to cancel outstanding orders before the user’s account reaches the liquidation threshold. This process is designed to help the user’s position drop below the critical risk threshold, avoiding immediate liquidation after certain orders are filled.
Rules for order cancellation in :
Risk threshold: Order cancellation is triggered when the net assets in the user’s account are less than the sum of the account's maintenance margin and the initial margin for any orders that might increase the borrowed amount.
Action taken: The system will cancel orders that share the same margin crypto as the position at risk. Orders that do not share the same crypto as margin will not be cancelled. This action aims to reduce the amount of margin in use so as to increase the margin level of the position.
Forced Liquidation:
When the margin level of your isolated margin level falls below 100%, the system initiates forced liquidation to protect the user's account from further losses. Here’s how this process works:When the margin level drops to 100% or lower:
Trigger for Forced Liquidation: The system will trigger forced liquidation, progressively reducing the tiers until the margin level exceeds 100%. If the tier-by-tier reduction is still insufficient to meet the requirement, the system will trigger full liquidation.
Liquidation execution sequence: System will prioritise selling off assets before margin when liquidating positions
Bankruptcy compensation: Insurance fund will cover the shortfall
Liquidation emails: When liquidation execution is completed, we will send out emails with the liquidation details to users.
For example:
User opens a BTC-USDT long position using BTC as margin
Isolated open orders using BTC as margin will be cancelled first
If the margin level drops below 100%, the system will partially liquidate the position by selling BTC assets to pay off USDT liabilities, or if that is not enough to pay them off, it will use BTC margin, thus dropping the position to the next level.
Conclusion
Isolated margin positions offers robust risk management through clearly defined rules for order cancellation and liquidation. These mechanisms work together to protect traders from excessive losses by ensuring that margin requirements are met and by implementing preventive actions like order cancellation and tier-based liquidation. You should still maintain full responsibility for your assets and adjust them accordingly in order to prevent liquidation. Understanding these processes is crucial for managing your trades effectively and minimizing the risk of forced liquidation.