When trading derivatives on JuCoin, the term "margin" refers to the amount of money you allocate to back your leveraged positions. While the term has various meanings in finance, in cryptocurrency derivatives trading, it's simply the money that secures your trades.
Isolated Margin
Isolated margin mode allows you to allocate a specific amount of margin to each individual position. This means your risk is isolated (or limited) to just the margin you've assigned to that particular trade.
For example, if you open a Bitcoin perpetual contract position with 1,000 USDT in isolated margin mode, the maximum you can lose from this position is that 1,000 USDT. Even if you have more funds in your account, they won't be touched if this position gets liquidated.
Cross Margin
Cross margin mode, on the other hand, shares your entire available balance across all your positions. This means all your available funds can be used to prevent any of your positions from being liquidated.
For instance, if you have 10,000 USDT in your derivatives account and open several positions using cross margin, the entire 10,000 USDT acts as potential margin for all positions. If one position starts approaching liquidation, it can draw from the entire balance to avoid being closed.
When to Use Each Mode
Isolated margin is generally preferred when you want strict risk management for individual positions. For example, if you open a position with 1,000 USDT in isolated margin mode and the market moves sharply against you, your maximum loss is limited to that 1,000 USDT, even if the asset's price drops to zero. The rest of your account balance remains untouched and available for other opportunities.
Cross margin can be more capital efficient since it pools all your resources together. Let's say you have 10,000 USDT total and open a position using 1,000 USDT as margin. If the market moves against you, instead of being liquidated when the 1,000 USDT is depleted (as would happen in isolated mode), the position can draw from your remaining 9,000 USDT to stay open. This could save a position that would have been liquidated under isolated margin, potentially allowing it to recover if the market reverses. However, this also means a single unsuccessful trade could deplete your entire account balance rather than just the allocated margin. Cross margin is typically used by experienced traders who actively manage multiple positions and want to maximize their capital efficiency.