Introduction on Isolated Margin

Isolated margin is a newly introduced trading mode by BIT that operates in addition to unified margin mode. Under Isolated margin mode, users can allocate funds as collateral for specific positions for trading, while funds/positions under unified margin mode are unaffected. This can help isolating risks on different positions and reducing overall account risk.

The advantage of Isolated margin is that margin and PnL for isolated margin positions are calculated separately. Risks and ROI are independently managed from unified margin account. In the event of a forced liquidation, the loss will be debited from isolated margin balance, limiting the impact on unified margin positions.

Isolated Margin Mode

Switching Between Unified Margin and Isolated Margin

For the same trading pair, only one mode can be applied, either unified margin mode or isolated margin mode.

For example,

A unified account can has BTC-USDT Perp in isolated margin mode, and ETH-USDT Perp, SOL-USDT Perp, FIL-USDT Perp in cross-margin mode; or

ETH-USDT Perp, SOL-USDT Perp in isolated margin mode, BTC-USDT Perp, FIL-USDT Perp in cross-margin mode;

The account is NOT possible to have:

ETH-USDT Perp, SOL-USDT Perp in isolated margin mode, BTC-USDT Perp, ETH-USDT Perp, FIL-USDT Perp in cross-margin mode;

Before switching modes, user need to make sure there are no open orders or positions on the trading pair; otherwise, the switch would not be successful.

Isolated Margin Balance

The calculations are as follows:

Isolated Margin Balance = Isolated Position Frozen + Isolated Unrealized Profit and Loss

Isolated Margin Ratio = Maintenance Margin / Isolated Margin Balance

User can increase or reduce isolated margin balance to manage position risk level. Note this action will cause estimated liquidation price to change accordingly.

Margin Rules

Rules on maximum leverage allowed and the maintenance margin requirement for Isolated margin position can reference to ‘Margin Rules’ under Trading Info.

Liquidation Process

When isolated margin ratio exceeds 100%, the system will initiates liquidation process. Any open orders (except for reduce-only orders) on the associated trading pair will be closed. Order placing will be disabled. Live positions on that trading pair will get liquidated. When liquidation is complete, remaining margin balance will be automatically transferred to user’s unified margin account.

During the process, user cannot take actions other than increasing isolated margin balance and checking on the position status.

Risk Isolation

The purpose of applying isolated margin mode is to limit specific trading pair’s risk from the account. However user need to note two following scenarios:

Scenario 1: When bankruptcy occurs to an isolated margin position, liability will be transferred to user’s unified margin account.

Scenario 2: When account margin balance is below zero, liquidation will be initiated. At this point, isolated margin position will not be exempted from being liquidated. Remaining balance post liquidation will be transferred to user’s unified margin account.

Fee Deductions

Any fees incurred from transaction, funding (funding fees) and liquidation under isolated margin mode will be deducted from unified margin account.