Understanding the core concepts of leverage, risk limits, and margin is fundamental to trading on any sophisticated platform. These elements dictate your buying power, your risk exposure, and the health of your trading positions. This guide breaks down each component in clear, actionable terms to help you navigate your trading dashboard with confidence and make more informed decisions.
What is Leverage?
Leverage allows you to open a position that is larger than your actual account balance by borrowing funds. It is a powerful tool that can amplify both gains and losses.
Cross Margin (Full Account Leverage)
- Leverage: Up to 100x
- Margin Source: Funds are drawn from your Cross Wallet (CROSS). This wallet acts as a shared pool of collateral for all your positions in this mode.
- Functionality: In this mode, your entire available balance in the Cross Wallet is used to support all your open positions. This can help prevent liquidation on a single position if another is performing well, but it also means all positions are mutually exposed to risk.
Isolated Margin (Position-Based Leverage)
- Leverage: Flexible, typically from 1x up to 100x
- Margin Source: Funds are allocated from a dedicated Isolated Wallet (ISOLATED) for that specific position.
- Functionality: This mode isolates the risk to the capital you have allocated to a single trade. If the position is liquidated, your losses are strictly limited to the funds in that trade's Isolated Wallet, protecting the rest of your capital.
The margin field on your trading interface will automatically display the balance of the corresponding wallet (Cross or Isolated) based on the leverage mode you have selected.
For a deeper dive into how to apply this, you can explore more advanced trading strategies that utilize different leverage types.
Understanding Risk Limits
The risk limit is a protective feature that caps the size of a position you can hold for a particular contract. It is designed to manage the risk for both the trader and the platform.
How to Adjust Your Risk Limit
- To edit your risk limit, simply locate and click the blue "Edit" button typically found near your position or order details.
- A prompt will appear if your new order would cause your total position size to exceed your current risk limit. This system notification requires you to consciously adjust (increase) your risk limit before proceeding.
- When changing the limit, the interface will show a "New" column displaying the new initial margin percentage. Confirm the change by clicking "Confirm."
Increasing your risk limit allows for larger positions but often requires a higher initial margin percentage, meaning more of your capital is locked up as collateral. 👉 View real-time tools for calculating margin impact
A Detailed Look at Margin Fields
Margin is the collateral you need to open and maintain a leveraged position. The trading interface displays several key metrics related to your margin.
- Wallet Type: Displays the balance of either your Cross (CROSS) or Isolated (ISOLATED) wallet, depending on your chosen leverage mode for the position.
- Wallet Balance: This is calculated as: Deposits - Withdrawals + Realized P&L. It represents the actual cash value of the wallet.
Unrealized P&L: This is the current profit or loss on your open positions, calculated using the mark price.
- For Long Positions: (Mark Price - Entry Price) × Contract Multiplier (e.g., 0.001) × Number of Contracts
- For Short Positions: (Entry Price - Mark Price) × Contract Multiplier (e.g., 0.001) × Number of Contracts
- Margin Balance: This is your Wallet Balance + Unrealized P&L. It represents the total equity you have in that specific wallet.
- Position Margin: The total collateral currently locked up in all open positions within this wallet. It is the sum of the Notional Value of each position multiplied by the initial margin percentage.
- Order Margin: The collateral currently reserved for open orders (e.g., unfilled limit orders) within this wallet. Calculated as the sum of the notional value of all orders multiplied by the initial margin percentage.
- Available Balance: This is your usable capital. It is calculated as: Wallet Balance - Position Margin - Order Margin. This is the amount you have available to open new positions or place new orders.
Frequently Asked Questions
Q: What is the main difference between Cross and Isolated Margin?
A: Cross Margin uses your entire wallet balance as collateral for all positions, which can prevent liquidation but risks your whole account. Isolated Margin contains risk to the funds allocated to a single trade, protecting your other capital.
Q: When should I increase my risk limit?
A: You should only increase your risk limit if you fully understand the implications. It is necessary when you want to open a larger position, but be aware that it will require you to post a higher amount of margin as collateral for that position.
Q: Why is my Available Balance less than my Wallet Balance?
A: Your Available Balance is your Wallet Balance minus any funds already being used as collateral for open positions (Position Margin) and orders (Order Margin). It shows you what is truly free to trade with.
Q: What happens if I exceed my risk limit?
A: The system will not allow you to open an order that would cause your position to exceed your current risk limit. You will be prompted to increase your risk limit before the order can be placed.
Q: Is higher leverage always better?
A: No, higher leverage dramatically increases both potential profits and potential losses. It accelerates the rate at which you can be liquidated if the market moves against you. It should be used cautiously by experienced traders.
Q: How is Unrealized P&L calculated?
A: It is calculated using the mark price, not the last traded price, to prevent manipulation. The formula differs for long and short positions, as detailed in the guide above.