Why Does Position Margin Decrease?
#Basic
#Futures
#Beginners
Related Articles
1. What is Margin?
In futures trading, traders can participate in buying and selling futures by paying a small amount of funds as a financial guarantee based on the contract price and a specified ratio. This fee is known as the crypto futures margin. MEXC offers two distinct margin modes: Isolated Margin and Cross Margin.
Isolated Margin means that in the isolated margin mode, each position has its own separate margin calculation, and the profits and losses of different positions do not affect each other. This means each position has its own margin balance, and any loss can only be covered by the margin of that particular position. The maximum loss for an isolated position is the initial margin and any additional margin used for that position.
In cross margin mode, on the other hand, all available assets in the user's futures account are considered as available margin. In the cross margin mode, losses can potentially affect the entire account. Currently, MEXC supports adjusting existing positions from isolated margin to cross margin but does not support adjusting from cross margin to isolated margin.
2. Why Does Position Margin Decrease?
2.1 Opening a Futures Position: When you open a new futures position, you need to provide a certain amount of margin as a requirement for the trade. This margin is deducted from your available margin and frozen to ensure you have sufficient funds to cover potential losses. Once you close the position or stop the loss, the frozen margin will be released back into your available margin.
2.2 Trading Losses: Futures trading is affected by market price fluctuations. If the market price moves in the opposite direction of your position, it will result in losses.
2.3 Futures Fees: MEXC offers ultra-low futures trading fees. When you engage in futures trading, the fees are deducted from your available margin.
2.4 Funding Fee Settlement: The funding fees paid by traders are deducted from the available margin. If a trader does not have enough available margin, the funding fees will be deducted from the position margin, causing the liquidation price to move closer to the market price and increasing the risk of forced liquidation.
2.5 FuturesForced Liquidation: When forced liquidation is triggered, your margin amount will incur a loss.
2.6 Fund Transfer: Transferring funds from your futures account to other accounts will also reduce the position margin.
2.7 Expiration of Futures Bonuses: If your futures account has futures bonuses acting as margin, the expiration of these bonuses will also lead to a decrease in your margin.
Disclaimer: This information does not provide advice on investment, taxation, legal, financial, accounting, consultation, or any other related services, nor does it constitute advice to purchase, sell, or hold any assets. MEXC Learn provides information for reference purposes only and does not constitute investment advice. Please ensure you fully understand the risks involved and exercise caution when investing. The platform is not responsible for users' investment decisions.