What Is the Main Drawback of Using Cross Margin for High-Risk Trades?
The main drawback of cross margin for high-risk trades is the risk of total account liquidation. Because cross margin uses the entire available account balance as collateral, a single, rapidly losing position can draw on all funds.
If the market moves severely against the position, the entire account, including funds intended for other purposes, can be wiped out.
Glossar
Funding Rate
Mechanism ⎊ Funding Rate represents a periodic payment exchanged between traders holding opposing positions in perpetual futures contracts, establishing an equilibrium between contract prices and the underlying spot market.
High-Risk Trades
Risk ⎊ High-risk trades are speculative positions where the potential for substantial capital loss significantly outweighs the probability of profit.
Cross Margin
Leverage ⎊ Cross margin, within cryptocurrency derivatives and options trading, fundamentally involves utilizing a single margin pool to collateralize positions across multiple instruments.