In the dynamic world of cryptocurrency trading, managing risk and capital efficiency is paramount. Multi-currency cross-margin mode is a sophisticated account feature that allows traders to utilize the collective value of all their deposited assets as collateral for various trading activities. This unified approach to margin can provide greater flexibility and potentially enhance trading strategies.
How Multi-Currency Cross Margin Works
In this mode, your trading account isn't segmented by individual currencies. Instead, after depositing assets, the total USD value of your entire portfolio is calculated and used to determine your available margin. This pooled equity can then be used to place orders and hold positions across a diverse range of instruments, including:
- Spot trading
- Margin trading
- Expiry (delivery) futures
- Perpetual futures
- Options contracts
A key feature is the auto-borrow mode. When enabled, you can still execute trades even if the available balance of a specific currency is insufficient, provided your overall account equity in USD is adequate. For instance, you could sell a cryptocurrency you don't currently hold if your total account value supports the trade. If this activity results in a negative equity for that specific currency, a liability is automatically created, and interest will begin to accrue on the borrowed amount.
Risk is measured holistically in USD. Your positions under cross-margin will not be liquidated as long as your overall adjusted equity is sufficient to cover the total maintenance margin required for all open positions. If your adjusted equity falls below this threshold, all cross-margin positions are at risk of being partially or fully liquidated. To isolate the risk of a specific position, traders often use the isolated margin mode.
Understanding Key Terms and Calculations
To effectively navigate this mode, it's crucial to understand the metrics that define your account's health and capabilities.
Currency-Level Metrics
These calculations are performed for each individual currency in your account.
| Term | Definition |
|---|---|
| Balance | The total amount of a currency held in your cross-margin account. |
| Floating PnL (Cross) | The sum of unrealized profit and loss from all cross-margin positions settled in that currency. |
| Equity (Cross) | The effective value of the currency. Calculated as: Balance + Floating PnL (Cross) + Options Value – Accrued Interest. |
| Frozen Equity | The amount of a currency currently locked in open orders or estimated fees. |
| Available Equity | The amount of a currency available for new orders and fees. Calculated as: Max (0, Equity (Cross) – Frozen Equity). |
| Liability | The debt owed for a currency, which accrues interest. |
| Potential Borrowing | The amount incurred when equity is insufficient to cover frozen equity for a new order. |
| Potential Borrowing Frozen Margin | The margin reserved due to potential borrowing. Calculated as: Potential Borrowing / The currency's borrow leverage. |
A Practical Currency Example
Imagine your account holds:
- 2 BTC (priced at $80,000 each)
- 6,000 SOL (priced at $200 each)
- 100,000 USDT
You open a long perpetual futures position for 0.5 BTC with 10x leverage. If the BTC price rises to $100,000, your floating PnL is 10,000 USDT.
Now, you place a sell order for 4 BTC. Your BTC equity is only 2, so the frozen equity (4 BTC) exceeds your available equity. This triggers a potential borrowing of 2 BTC. If your set BTC borrow leverage is 5x, this also triggers a potential borrowing frozen margin of 0.4 BTC.
Account-Level Metrics
These metrics assess the overall health of your account by converting all currencies into a discounted USD value.
| Term | Definition |
|---|---|
| Adjusted Equity | The discounted USD value of all currencies, used to determine available margin for new positions and orders. This is the most important metric for risk assessment. |
| Position Value | The total USD value of all your cross-margin positions and any potential borrowing. |
| Frozen Margin | The total USD value of margin currently locked in your open orders and existing positions. |
| Available Margin | The remaining USD value of margin you can use to open new trades. Calculated as: Adjusted Equity – Frozen Margin. |
| Maintenance Margin | The minimum amount of equity required to keep all your cross-margin positions open. |
| Maintenance Margin Ratio | The key risk indicator. Calculated as: Adjusted Equity / (Maintenance Margin + Liquidation Fees). A ratio of 100% or below triggers liquidation procedures. |
The Role of Discount Rates
To mitigate market volatility risk, the platform calculates the USD value of each currency using a discount rate. This rate is applied on a tiered basis—the larger your holding of a specific asset, the higher the tier and the lower the discount rate applied to portions of your holding. This means the collateral value of large holdings is slightly discounted.
For example, the first 20 BTC might have a 0.98 discount rate, the next 5 BTC a 0.975 rate, and so on. This ensures the calculated collateral value is resilient to normal market swings. 👉 View real-time discount rate tiers
Trading Rules: Auto-Borrow vs. Non Auto-Borrow
Your trading experience differs significantly based on whether you enable auto-borrow mode.
Auto-Borrow Mode
- Logic: The system focuses on your total account adjusted equity in USD. If this is sufficient to cover the margin needed for a new order, the trade can proceed, even if you lack the specific currency required.
- Benefit: Provides maximum flexibility and prevents missed trading opportunities due to a currency imbalance.
- Risk: Can automatically generate liabilities and interest if a currency's equity becomes negative.
Non Auto-Borrow Mode
- Logic: The system checks both your total account adjusted equity AND the available balance/equity of the specific currency needed for the trade.
- Benefit: Offers greater control and prevents accidental borrowing.
- Drawback: A trade will fail if you have sufficient total equity but lack the specific currency, potentially causing you to miss a trade.
Interest and Forced Repayment
In both modes, if a currency's liability exceeds its interest-free limit, forced repayment mechanisms are triggered. This involves automatically selling surplus holdings of other currencies in your account to cover the debt. Understanding these limits is crucial for managing costs.
Risk Assessment and Liquidation
The multi-currency margin system employs a two-stage process to manage risk and avoid sudden, full liquidations.
- Order Cancellation Assessment: If your account risk is elevated but not yet critical, the system may selectively cancel some of your open orders. This reduces your frozen margin and can help lower your overall risk profile before it triggers a liquidation.
- Pre-Liquidation Assessment: This occurs when your Maintenance Margin Ratio falls to 100% or below. The system first cancels all open orders under cross-margin mode and certain orders under isolated margin mode. If the risk remains, forced liquidation begins.
The liquidation process itself is a sophisticated, multi-phase event designed to reduce risk methodically:
- Phase 1: Liquidate opposing positions of the same contract (in hedge mode).
- Phase 2: Liquidate a combination of long and short positions across different instruments to keep the account's overall delta value neutral.
- Phase 3: If phases 1 and 2 are insufficient, liquidate the remaining unhedged positions that will reduce the maintenance margin the most.
Frequently Asked Questions
Q: What is the main advantage of using multi-currency cross margin?
A: The primary advantage is capital efficiency. It allows you to use the entire value of your diverse portfolio as collateral, freeing you from the constraint of having the right specific currency for each trade and potentially allowing for more complex, multi-instrument strategies.
Q: When should I use isolated margin instead of cross margin?
A: Use isolated margin for high-risk positions or when you want to experiment with a new strategy. It isolates the risk of that single position, ensuring its failure cannot impact the rest of your portfolio held in cross margin. It's a key tool for risk management.
Q: What is the most important number to watch to avoid liquidation?
A: The Maintenance Margin Ratio is the single most critical metric. You must ensure it stays well above 100%. Most platforms will warn you as it approaches 300%. Regularly monitor this ratio, especially during periods of high market volatility.
Q: How does auto-borrow work if I don't have enough USDT for fees?
A: If your total adjusted equity in USD is sufficient, the system will automatically cover the trading fee by effectively creating a small USDT liability. This allows the trade to execute smoothly without you needing to manually swap assets for fee payment.
Q: Can I lose more than my initial investment in cross margin?
A: In a forced liquidation scenario where the market moves extremely rapidly, it is possible to lose your entire cross-margin portfolio and even end up with a negative balance in a specific currency, for which you would be liable. However, exchange insurance funds often cover these rare events.
Q: How are the prices for different cryptocurrencies determined for equity calculation?
A: Prices are sourced from robust index prices. For major coins like BTC and ETH, a USD index is used. For others, the price is derived from their USDT or BTC trading pair price, which is then converted to USD using the relevant index price for accuracy and fairness.
Disclaimer: This document is for informational purposes only. Digital asset trading involves significant risk and can result in the loss of your invested capital. You should carefully consider your risk tolerance and seek independent advice before trading. Leveraged trading magnifies both gains and losses. Past performance is not indicative of future results.