Cross & Isolated Margin

Position and Margin Mechanisms

ADEN offers flexible position mechanisms, supporting both bidirectional and unidirectional position modes to cater to diverse risk preferences and trading strategies. Users can choose between cross-margin or isolated margin modes, optimizing capital efficiency with cross-margin or achieving precise risk isolation and management with isolated margin, delivering a highly personalized trading experience.

---

Leverage and Margin Relationship

Margin refers to the capital required to open a position in contract trading. Due to the high-leverage nature of contracts, users can trade larger positions with the same amount of capital, amplifying both potential profits and losses.

• Higher Leverage:

  • Requires less margin, allowing traders to control more contracts with the same account balance, thus amplifying potential returns.

  • Results in a liquidation price closer to the entry price, reducing the position’s loss tolerance and increasing the risk of liquidation.

• Lower Leverage:

  • Requires more margin, limiting the number of contracts tradable with the same balance, which reduces the potential for amplified returns.

  • Positions the liquidation price further from the entry price, increasing the position’s loss tolerance and reducing the likelihood of liquidation.

---

Isolated Margin

In isolated margin mode, the margin for a position is separate from the user’s account balance. The initial margin is set at the outset, but users can adjust it by modifying leverage, risk limits, or depositing/withdrawing margin. If the margin balance falls to or below the maintenance margin level, liquidation is triggered, with the maximum loss limited to the position’s margin amount.

Isolated Margin Calculation

Formula: Initial Margin = (Position Value / Leverage) + Closeout Fee

Example: User A holds a position valued at 100 USDT with 100x leverage. The margin is calculated as: (100 / 100) + (100 × 0.075%) = 1.075 USDT

---

Cross-Margin

In cross-margin mode, the entire balance of a specific asset in the user’s account serves as margin. Multiple positions set to cross-margin mode share the account balance as margin. However, unrealized profits from profitable positions cannot be used as margin for other positions. Liquidation is triggered when the net asset value cannot meet the maintenance margin requirement, resulting in the loss of the entire account balance for that asset.

Cross-Margin Calculation

Formula: Initial Margin = Position Value × Initial Margin Rate + Closeout Fee Note: If there is unrealized profit/loss in a loss state, the absolute value of the unrealized loss must be added to the margin (unrealized profits cannot be used to open new positions).

Example: User B holds a position valued at 100 USDT with cross-margin, an initial margin rate of 1%, an account balance of 200 USDT, and an unrealized profit of +10 USDT. The margin is calculated as: (100 × 1%) + (100 × 0.075%) = 1.075 USDT The displayed margin for the position is 1.075 USDT, but the actual margin used is the full account balance of 200 USDT.