Understanding Margin and Leverage
In futures trading, you'll notice leverage multipliers and account mode options next to each contract name. Leverage amplifies both your potential profits and risks by increasing your trading capacity beyond your initial capital.
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When using leveraged contracts, traders must deposit a percentage of funds as collateral—this is called margin. There are two primary types:
- Coin-margined contracts: Use the base currency (e.g., BTC) as collateral
- USDT-margined contracts: Use USDT stablecoin as collateral
The trading interface allows you to:
- Set leverage via numerical input or slider
- View maximum position size (in coins or contracts) based on selected leverage
- Calculate required margin for current positions
Key Consideration: Increasing leverage may initially raise your maximum position size, but eventually encounters position tier limits. These limits can be checked under "Position Tier Explanation" in the sidebar.
Margin Calculation: Isolated vs. Cross Margin
OKX offers two margin systems that apply per contract type (e.g., BTC coin-margined futures):
Cross Margin (All Positions Share Collateral)
- Uses all available funds in the contract account as shared margin
- Margin formula:
Contract Size × Quantity / (Mark Price × Leverage) - Margin adjusts with mark price fluctuations
- Generally lowers liquidation risk when not fully leveraged
Isolated Margin (Separate Collateral per Position)
- Allocates specific margin to individual positions (weekly/quarterly contracts)
- Margin formula:
Contract Size × Quantity / (Entry Price × Leverage) - Margin remains fixed after opening
Ideal for:
- Independent position tracking
- High-leverage trading with risk containment
Liquidation Warning:
- Isolated mode: Only loses margin allocated to the liquidated position
- Cross mode: Risks entire account balance for the contract type
Nominal vs. Actual Leverage
Nominal Leverage
- The selected multiplier on the trading interface
- Determines maximum position size and margin requirements
Actual Leverage
- Real risk exposure calculated as:
Position Value / Used Margin - In isolated mode: Matches nominal leverage
- In cross mode: Varies based on position size
Calculation Formulas:
Coin-Margined Contracts:Position Contracts × Face Value / (Mark Price × Account Equity)
OR Position Coins / Account Equity
USDT-Margined Contracts:Position Contracts × Face Value × Mark Price / Account Equity
OR Position Coins × Mark Price / Account Equity
Example:
10× nominal leverage in BTC coin-margined perpetual contracts:
- 1000 contracts (max): Actual leverage = 10×
- 300 contracts: Actual leverage = 3×
FAQ Section
What's safer - isolated or cross margin?
Isolated margin protects unrelated positions during liquidation but requires precise risk management. Cross margin offers better buffer against volatility but risks entire account funds for the contract type.
How often should I adjust my leverage?
Reassess leverage whenever:
- Market volatility changes significantly
- Your risk tolerance shifts
- Position sizes approach tier limits
Can I switch margin modes after opening a position?
No, margin mode changes require closing existing positions first. Plan your strategy before entering trades.
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Pro Tip: Always test strategies with small positions before committing significant capital, especially when using high leverage.