Can a Trader Switch between Cross and Isolated Margin Modes Mid-Trade?
Yes, most major crypto futures exchanges allow a trader to switch between Cross and Isolated margin modes mid-trade, but only under certain conditions. The most common restriction is that the position must have sufficient margin to satisfy the requirements of the mode being switched to.
For instance, switching from Cross to Isolated requires ensuring the isolated margin is enough to prevent immediate liquidation.
Glossar
Crypto Futures Exchanges
Platform ⎊ Crypto Futures Exchanges operate as dedicated trading venues, offering standardized derivative contracts that obligate parties to transact a cryptocurrency asset at a predetermined price on a future date.
Cross to Isolated
Transition ⎊ The transition from cross margin to isolated margin involves re-designating collateral for a specific position.
Margin Modes
Definition ⎊ Margin modes are the distinct settings offered by cryptocurrency derivatives exchanges that determine how a trader's collateral is allocated and utilized to support open leveraged positions.
Isolated to Cross Margin
Leverage ⎊ Isolated to cross margin represents a dynamic shift in risk exposure within derivative positions, allowing traders to transition from segregated margin ⎊ where losses are confined to a specific contract ⎊ to a pooled margin system.
Isolated Margin
Segregation ⎊ Isolated Margin is an account setting where the margin allocated to a specific derivative position is strictly segregated from the collateral supporting other positions, preventing losses in one trade from impacting the maintenance margin of another.