Isolated margin trading is a powerful feature that allows you to amplify your trading positions by borrowing funds. This guide provides a clear, step-by-step walkthrough for using isolated margin on a mobile trading application, helping you understand the core process from funding your account to closing a trade.
Getting Started with Isolated Margin
Before you begin, ensure you have a funded account on your chosen trading platform. Isolated margin is a specific mode of trading where the margin you post is isolated to a single position. This protects your other assets from being liquidated if that particular trade moves against you.
The first step is always to navigate to the correct section within your trading app. This is typically found within a "Trade" or "Trading" menu, leading to a "Margin Trading" subsection.
Accessing the Isolated Margin Feature
Open your trading application and log into your account. From the main navigation, proceed through the following steps:
- Tap on Trade.
- Select Margin Trading.
- Finally, choose Isolated Margin.
Once on the isolated margin page, you will need to select your desired trading pair (e.g., BTC/USDT) from a provided list or menu.
Transferring Your Initial Capital
Your initial capital, known as the margin, must be transferred into your isolated margin account for the specific trading pair you wish to trade.
On the trading interface, locate and tap the Transfer icon or button. A new window will appear where you can:
- Select the isolated margin trading pair you are using (e.g., BTC/USDT).
- Choose the amount of assets to transfer from your main trading account into your isolated margin account.
- Confirm the transfer.
This transferred amount acts as your collateral for the loan you are about to take.
Borrowing Additional Funds
With your margin in place, you can now borrow additional funds to increase your buying power. On the main trading screen, tap the Borrow button.
In the borrowing interface:
- Select the currency you wish to borrow (e.g., USDT if you are going long on Bitcoin).
- Enter the amount you want to borrow.
- Review the terms and tap Confirm.
Many platforms offer an Auto-Borrow function. When enabled, this feature automatically borrows the required funds the moment you place an order, streamlining the process.
Placing Your Trades
Once your account is funded with both your margin and borrowed funds, you are ready to place a trade. The interface will offer several order types to execute your strategy.
Going Long on an Asset
To open a long position (betting the asset's price will rise), select the Buy tab on the trading screen. Then, choose your preferred order type from a dropdown menu.
- Limit Order: Enter your desired purchase price (Limit Price) and the amount of the asset you wish to buy.
- Market Order: Enter the total amount of quote currency (e.g., USDT) you want to spend to buy the asset at the best available market price.
- Stop-Limit Order: Set a trigger price (Stop Price) and a limit price. Once the stop price is hit, a limit order is placed.
- Stop-Market Order: Set a trigger price (Stop Price). Once hit, a market order is executed.
After entering all parameters, tap the button to confirm the order (e.g., Buy BTC). You will likely need to enter your trading password to finalize the transaction.
Going Short on an Asset
To open a short position (betting the asset's price will fall), select the Sell tab. The order types function similarly to the long trade examples.
- Limit Order: Set your desired selling price and the amount to sell.
- Market Order: Enter the amount of the base asset you want to sell at the market price.
- Stop-Limit and Stop-Market Orders: These function as they do for long orders, helping to manage risk or enter a position once a certain price level is breached.
Confirm the trade by tapping the appropriate button (e.g., Sell BTC) and authorizing it with your password.
Managing and Closing Your Position
Effective trade management is crucial in margin trading due to the added risk of leverage.
Monitoring Open Positions
Your open positions will be displayed on the trading interface, typically showing key metrics like entry price, liquidation price, current profit and loss (P&L), and margin ratio. Keeping a close eye on these figures is essential for risk management.
Closing a Trade Manually
To close your position and realize your P&L, you can manually place an opposite trade. For example, if you went long, you would place a sell order for the same amount of the asset. Many interfaces also provide a Close All button for quickly exiting a position at the market price.
Repaying Your Loan
After closing your position, you must repay the borrowed funds plus any accrued interest. Tap the Repay button on the trading screen.
In the repayment pop-up window:
- Select the currency of your loan.
- The interface may show the total outstanding amount, or you can enter a specific amount to repay.
- Tap Repay to complete the transaction.
An Auto-Repay feature is often available. When enabled, this function automatically uses any available funds in your isolated margin account to repay your loan when a position is closed. 👉 Explore more strategies for managing leveraged trades
Reviewing Your Trading Activity
It is good practice to regularly review your trading history and liabilities. Within the margin trading section of your app, you should find dedicated areas to:
- View Liabilities: See a detailed breakdown of your currently borrowed funds and the associated interest.
- Check Order History: Review a log of all your past orders, including opens, closes, borrows, and repayments. This history is vital for evaluating your performance and for accounting purposes.
Frequently Asked Questions
What is the main difference between isolated and cross margin?
Isolated margin restricts your risk to the specific funds allocated to a single trade. If that trade is liquidated, you only lose that initial margin. Cross margin uses your entire account balance as collateral, which can protect a position from liquidation but puts all your assets at risk.
How is interest charged on a margin loan?
Interest on borrowed funds is typically calculated on an hourly or daily basis and is charged directly from the assets in your isolated margin account. It's crucial to factor these costs into your potential profits.
What is a liquidation price?
The liquidation price is the price level at which your position will be automatically closed by the platform because your initial margin is nearly depleted. This occurs when the market moves significantly against your trade.
Can I add more margin to an open isolated position?
Yes, most platforms allow you to transfer more funds into your isolated margin account for a specific trading pair. This adds more collateral to your position, which can lower your liquidation price and reduce your risk.
Is isolated margin better for beginners?
Yes, isolated margin is generally recommended for beginners because it clearly defines and limits the maximum amount that can be lost on any single trade, making risk management more straightforward.
What happens if I don't repay the loan?
As long as your position remains open, the loan is active and accruing interest. If your position is liquidated, the platform will automatically sell the assets to repay the loan. If the proceeds are insufficient, your initial margin will be used to cover the remainder.