Huobi Futures, one of the fastest-growing crypto derivatives platforms, has recently made an announcement of a new app feature with the help of which USDT-Margined Swap traders can avail cross margin support. A lot of flexibility can be exercised by offsetting the positions that are on the verge of being liquidated in exchange for profitable positions for providing a seamless trading experience to the users. The cross margin feature of Huobi Futures would allow the users to select the strategies of their choice for efficient management of portfolios.
While announcing this new cross margin feature, Ciara Sun (the Vice President of Global Business at Huobi Group) announced that-
“With cross margin, we are aiming to give our users more control over the way they trade digital assets and manage their portfolios – a key objective at Huobi”. Further adding, “Everyone has a different trading methodology and strategy, so we want to empower users to build diverse portfolios without penalizing individual positions within a silo. Cross margin takes a more holistic approaches when assessing margin requirements by taking into account a user’s overall standing”
Now the Huobi Futures’ users shall be able to avail the benefits from both isolated-margin and cross-margin trading of USDT-margined swaps. As the cryptocurrency market is getting more and more volatile, the cross margin mode would allow the users to diminish the liquidation risk because the entire asset balance in the cross margin account shall act as a margin, and at the same time, the realized PnL from any one particular position could assist the losing positions.
Some of the trading pairs that would benefit a lot from the cross-margining feature include-
Huobi Exchange has already fetched a lot of attraction, and the addition of this new feature will further escalate the popularity among users.
Understanding Cross Margin Mode
For those who don’t know what cross margin mode is, then it is simply all swaps under the cross margin mode share the USDT in the cross margin account as the margin, which indicates that all positions under the cross margin mode share the same account equity. In simple words, cross margining helps the users to utilize their margin balances all across their accounts.
Cross-margining allows an individual or firm to increase its liquidity as well as financing flexibility. As such, the unnecessary liquidation of positions is avoided, and the possibility of any potential loss is also reduced. Cross margin is a robust risk management tool recommended for volatile markets as well as long-term trading plans.
Understanding Isolated Margin Mode
The available margin for a particular position is fixed under the isolated margin mode. It is a margin balance allocated to the individual position and allows the crypto traders to manage their individual positions by imposing limitations on the margin amount allocated to each such individual position. The margin balance allocated for each position is individually adjustable.
If a trader’s position has been liquidated under isolated margin mode instead of the complete margin balance, then in such a case, only the isolated margin balance would be liquidated. The isolated margin amount is adjustable, and if a particular position in the isolated margin mode is near to getting liquidated, then such liquidation could be avoided by allocating the excessive margin in the account.
Advantages of Huobi’s Cross Margin Mode
The top four Benefits of Huobi’s cross margin mode have been illustrated below:
Two margin modes for swaps
The users have the option to trade swaps in cross margin mode as well as isolated margin mode at the same time provided that the asset allows the cross margin mode. In other exchanges, if a trade has been opened in the isolated account, then such trade would stay open only under the isolated account.
All the 13swaps as discussed above also (DOT/USDT, LINK/USDT, XRP/USDT, TRX/USDT, LTC/USDT, ETH/USDT, BTC/USDT, ADA/USDT, EOS/USDT, BCH/USDT, BSV/USDT, UNI/USDT, YFI/USDT) support not only cross margin mode but real-time settlement as well. Once the position has been closed, then the trader would be able to quickly withdraw all the realized profit after deducting unrealized loss, occupied margin, or both in real-time without the need to wait until the next settlement.
Partial liquidation support
If the liquidation has been generated at a time when the margin ratio of the cross-margin account is less than or equal to 0%, then the system would abort all the open orders. If the margin ratio is still less than 0, the system will sort the positions of each swap under the cross margin mode from low to high based on the unrealized PnL in the current period. For the purpose of lowering the tier of adjustment factor, the system will partially liquidate the positions of swaps with the largest loss-marking until the margin ratio is greater than 0%.
How to Use Cross Margin Feature on Huobi Futures
Huobi Exchange is rising as a robust and reliable platform for executing the trades. A trader can sign-up on the platform and get started with cross margin trading activity to park maximum benefits.
STEP-1: Sign-up on the Huobi exchange account by filling up the details as requested in the form:
STEP-2: After successfully creating the account, the following trading panel/window will show up:
STEP-3: In the next step, you can click on Balances from the navigation bar and then hit on the Exchange account (Deposit and withdrawal). It is to be noted that the user should have some balance before getting started with the trading.
STEP-4: In this step, the balance in the account already stands at USD 15, which would need to be transferred to the margin account for executing the trade. To transfer the sum/balance, the user will have to hit the Transfer button to move the funds into Huobi’s cross- margin account.
STEP-5: After hitting the transfer button, you will be directed to the next window where you will observe the successful transfer of the funds (USD 15 in this case) to the cross-margin trading account.
STEP-6: Now, you can head back to the trading panel which appeared under Step-2. You will notice the balance of USD 15. Just make sure to select the Cross.
You can select the leverage also and then hit on the Confirm button. Here, we have selected the leverage to be 10x.
STEP-7: Now, you will have to select the price at which you wish to open the trade.
Then select how much percentage of the fund you want to put into the trade. In this case, we have set the fund usage bar at 75%. Once done, then click on Open Short (Sell).
STEP-8: After clicking on the Open Short (Sell), your sales position would open up, and you would be able to view the same at the bottom of the panel. You can view the metrics like- Open Price, Position Price, Position Margin, Unrealized Panel, etc.
You also get the option to set the target points. For example, you can set the Close Short by selecting the price and percentage amount in BTC.
You can also trigger Take Profit, fill in the relevant details, and perform the checkout.
You can also set the Stop Loss by entering the details as per your custom requirements.
Huobi Exchange is one of the biggest crypto exchanges in terms of the daily trading volume. This reflects not only the huge amount of trade volume but the huge amount of trust that the users have in this innovative platform. The launch of cross margin in Huobi is only going to help the platform gain more traction by helping its trader experience seamless trading.
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