Binance, Exchanges

What Is the Difference Between Cross Margin and Isolated Margin Binance?

When you are trading on margin, you are essentially borrowing money from the exchange in order to trade. The amount of money that you can borrow is based on the margin requirements of the asset that you are trading, and the amount of money in your account.

There are two types of margin requirements: cross margin, and isolated margin.

Cross Margin

With cross margin, you are using the full value of your account to collateralize your trades. This means that if the value of your account decreases, so does the amount of money available to you for trading.

However, it also means that if the value of your account increases, you can use that additional equity to increase your position size.

NOTE: WARNING: Before engaging in any type of margin trading, it is important to understand the difference between cross margin and isolated margin Binance. Cross margin involves a single margin account where all available funds are used for a single trade. Isolated margin requires that traders use separate accounts for each individual trade. Each type of margin trading has different risks associated with it, so it is important to understand these differences before engaging in any kind of trading.

Isolated Margin

With isolated margin, you are only using a portion of your account to collateralize your trades. This means that if the value of your account decreases, your position size will not be affected.

However, it also means that you will not be able to use any additional equity in your account to increase your position size.

Which one should you use?

The answer to this question depends on your risk tolerance and trading style. If you are a conservative trader who wants to limit their downside risk, then isolated margin is probably a better choice for you.

However, if you are a more aggressive trader who is willing to take on more risk for the potential of greater rewards, then cross margin may be a better choice.

Previous ArticleNext Article