Introduction to Leverage Trading
Leverage trading allows investors to amplify their positions by borrowing funds, enabling higher potential returns (and risks) compared to standard spot trading. This guide covers key concepts, rules, and best practices for both isolated (逐仓) and cross (全仓) margin trading.
Core Components of Leverage Trading
1. Margin Rules
- Initial Margin Rate: Minimum collateral required to open a position
- Maintenance Margin Rate: Minimum equity level to prevent liquidation
Margin Calculation:
Used Margin = Position Size / Leverage
2. Trading Modes Comparison
| Feature | Isolated Margin | Cross Margin |
|---|---|---|
| Risk Containment | Per position | Entire account |
| Liquidation | Single position | All positions |
| Best For | Short-term trades | Portfolio hedging |
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Risk Management
Liquidation Triggers:
- When equity ≤ maintenance margin requirement
- Partial vs. full liquidation protocols
Avoiding Margin Calls:
- Monitor positions with 20% buffer above maintenance level
- Set stop-loss orders proactively
Volatility Considerations:
- Higher leverage requires tighter risk controls
- Asset-specific margin requirements vary
Step-by-Step Trading Process
Account Setup
- Enable margin account in settings
- Transfer collateral (BTC, ETH, etc.)
- Select leverage ratio (2x–125x)
Order Execution
- Web/App interface differences
- Borrowing rate calculations
- Interest fee schedules
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FAQ Section
Q: What's the difference between initial and maintenance margin?
A: Initial margin opens positions; maintenance margin prevents liquidation. Typically 10%-50% vs. 2%-15% respectively.
Q: How does cross-margin liquidation work?
A: All positions become collateral. The entire account enters liquidation when total equity ≤ maintenance requirement.
Q: Can I change leverage after opening a position?
A: No. Adjustments require closing and reopening positions.
Key Takeaways
- Leverage multiplies both gains and losses
- Isolated margin limits risk to individual positions
- Cross-margin uses shared collateral but higher systemic risk
- Always maintain buffer above maintenance levels