Isolated Modes and Cross Modes

Isolated mode and Cross mode are two common margin management modes in futures trading. These two modes have different characteristics and applicable scenarios.

1. Isolated Mode

In isolated mode, you only use a portion of the funds in your futures account as margin. The initial margin locked when placing an order is the maximum loss for that position. In this mode, your maximum loss is limited to the initial margin used. When a position is forcibly closed, any available balance you have will not be used to increase the margin for that position.

Isolated mode spreads the risk across different positions. The margin for each futures is calculated and maintained independently, which can reduce the risk of cross-profit and loss. However, since the margin is managed separately, this may result in lower capital utilization compared to Cross mode.

Take this for example. Wang has 100 USDT in his futures account. In isolated mode, he uses 10 USDT as margin and opens a long BTC position with 20x leverage. The estimated liquidation price is 10,000 USDT. When the BTC price drops to 10,000 USDT, Wang's position will be liquidated, and he will lose the 10 USDT margin. The remaining 90 USDT in the account will not be affected.

2. Cross Mode

In Cross mode, all the available balance in the futures account will be used as position margin. In Cross mode, the trader's positions have a lower risk of being forcibly closed, but the maximum loss amount will be all the funds in the contract account.

In Cross mode, traders can use all their margin for any position, making the use of funds more flexible and efficient. However, since all the margin is used to support all positions, Cross mode may result in the loss of all account funds if there is a significant market move or uncontrollable factors.

Let’s take a look at this example. Wang has 100 USDT in his futures account. In Cross mode, he opens a long BTC position with 20x leverage. The estimated liquidation price is 2,000 USDT. When the BTC price drops to 2,000 USDT, Wang's position will be liquidated, and he will lose all of his 100 USDT.

3. How to switch position mode on LBank?

Web

1. Log in your LBank account and navigate to the futures trading page. On the page, click the "Cross" button in the top right to switch the position mode.

2. Select your desired position mode and click on "Confirm".

App

1. Log in to your LBank account and navigate to the futures trading page. Click the "Cross" button in the top left to enter the position mode selection page.

2. Select your desired margin mode and click "Confirm".