Cross Margin - Guide

What is Cross Margin Mode on Pi42?

Cross Margin Mode is a flexible margin trading system designed to optimize your trading efficiency by sharing the available margin across all open positions. In Cross Margin Mode, your entire margin balance is used to cover margin requirements for any open positions, which helps minimize liquidation risks when one position's loss can be offset by the margin balance of other profitable or neutral positions.

Key Features of Cross Margin Mode:

1. Shared Margin Pool: In Cross Margin Mode, all your open positions share the same available margin balance. Profits or losses from one position directly impact the overall margin available for other positions. This ensures that margin is distributed dynamically across positions, allowing you to maintain a larger number of positions with potentially lower risk of liquidation.
   
   

2. Margin Balance: Your total margin balance is calculated based on the total funds in your Futures Wallet, which includes available margin, margin locked in positions, and any unrealized profits or losses from open trades. This balance is crucial as it determines how much margin is left to maintain your positions.
   
   

3. Cross Margin Ratio: The Cross Margin Ratio represents the ratio of the Maintenance Margin (the minimum amount needed to maintain your positions) to the overall margin balance. A higher Cross Margin Ratio indicates that you are approaching a margin call, while a lower ratio shows that you have sufficient margin to cover your positions.
   
   

4. Maintenance Margin: The Maintenance Margin is the minimum margin required to keep a position open. It fluctuates depending on your unrealized P&L (Profit and Loss) and changes in the value of your assets. If the Cross Margin Ratio exceeds a certain threshold, you may be at risk of liquidation.
   
   

5. Dynamic Balance Updates: Since unrealized profits and losses affect the available margin in real-time, your Available Balance in Cross Margin Mode is constantly updated based on the performance of your open positions. This dynamic behavior ensures that Pi42 always allocates the correct amount of margin to cover your active positions.
   
   

6. Transfer Flexibility: Users in Cross Margin Mode can transfer funds between the Futures Wallet and the INR Wallet. However, if there are cross positions open, a buffer percentage is applied to the available balance when transferring back to the INR Wallet to ensure that the positions remain adequately funded.

Why Choose Cross Margin Mode?

Cross Margin Mode is particularly suitable for traders who manage multiple positions at once and want to use their available margin more efficiently. By sharing margin across all positions, it provides greater flexibility and helps reduce the risk of liquidation when some positions perform poorly but others perform well.

Key advantages include:

• Risk Management: Losses in one position can be offset by profits in another, reducing liquidation risks.

• Better Margin Utilization: Allows for more efficient use of funds, especially when holding multiple positions.

• Flexible Transfers: As long as cross positions remain funded, users can move funds between wallets, offering more control over available funds.

How to Switch to Cross Margin Mode?

To enable Cross Margin Mode on Pi42, follow these simple steps:

1. Go to your Futures Wallet on Pi42.

2. In the Futures Wallet, you will see two tabs: Cross Margin and Isolated Margin.

3. Select the Cross Margin tab.

4. Your positions will now be managed under the Cross Margin system, with your entire margin balance being shared across all open trades.

Understanding Cross Margin Ratio and Liquidation Risks:

The Cross Margin Ratio is a key indicator of your risk. If your Cross Margin Ratio reaches 100%, it means that your total margin is equal to the Maintenance Margin, and your positions are at risk of liquidation.

To avoid liquidation:

• Monitor your Cross Margin Ratio regularly.

• Add funds to your Futures Wallet to increase your available margin.

• Close or reduce the size of losing positions to free up margin for other trades.

If a position is liquidated, only the margin allocated to that position is lost, but the remaining margin can still support other open trades.

This detailed introduction should provide users with a comprehensive understanding of Cross Margin Mode on Pi42. Let me know if you'd like to add more specifics!