Introduction to Futures Mode
Futures Mode is a sophisticated trading environment that enables users to trade across multiple business lines simultaneously. This includes spot trading, margin trading, futures contracts, perpetual swaps, and options trading. By transferring assets into a cross margin account, traders can streamline their operations and enhance capital efficiency.
In this mode, all trading products settled with the same cryptocurrency share a common total margin pool. The profits and losses generated across different positions can offset each other, potentially reducing overall risk exposure. However, this approach also means that risks are consolidated - the system evaluates the risk of all positions settled with the same cryptocurrency as a unified whole.
When the equity of a particular cryptocurrency becomes insufficient, it may trigger partial liquidation, full liquidation, or equity loss across all positions settled with that crypto. For traders who prefer to isolate the risk of individual positions, the isolated margin mode offers an alternative approach with separate risk management for each position.
Understanding Key Asset Metrics
Successful cross margin trading requires a thorough understanding of several critical asset metrics that determine your trading capacity and risk exposure.
Equity represents your individual asset balance plus the floating profit and loss from all positions. The calculation includes: balance in the trading account, PnL in cross margin positions, margin balance in isolated positions, PnL in isolated positions, and options market value. This comprehensive figure gives you a complete picture of your account's worth.
Free margin indicates the amount of a specific cryptocurrency available for trading margins, expiry futures, perpetual futures, and options (short positions) trading. It's calculated as the maximum of either zero or the crypto balance in cross margin plus floating PnL in cross-margin positions minus the amount currently in use.
Available balance refers to the amount of cryptocurrency that can be used for isolated positions, spot trading, and options (long positions) trading. This metric is primarily used for order calculation purposes rather than being displayed as a direct field on trading platforms.
In use encompasses all cryptocurrency in your trading account that is currently allocated to various purposes. This includes cross open orders, active positions, accrued interest, isolated open orders, and assets utilized by trading bots.
Floating PnL represents the sum of unrealized profits and losses across all margin, futures, and options positions settled with a specific cryptocurrency. This includes positions under both cross and isolated margin modes, providing a comprehensive view of your potential gains or losses.
Leverage in cross margin trading is calculated as position value divided by the sum of balance in cross positions plus floating PnL in cross margin positions. Position value calculations vary depending on the instrument type and margin currency, making accurate computation essential for risk management.
Maintenance margin ratio serves as a crucial risk assessment metric for each asset in your account. This ratio compares your available assets against the maintenance margin requirements and liquidation fees, helping traders gauge their proximity to liquidation triggers.
Total equity converts all cryptocurrency holdings into their fiat equivalent value, using OKX's pricing mechanisms. This universal metric helps traders understand their overall portfolio value regardless of the specific cryptocurrencies held.
Trading Rules and Mechanisms
In Futures Mode, traders can select between cross margin and isolated margin approaches based on their risk management preferences and trading strategies.
Cross Margin Trading Principles
When engaging in futures, perpetual contracts, options (short positions), and margin transactions using cross margin mode, traders must ensure that the available equity of the cryptocurrency in their account meets or exceeds the amount required for each order.
For spot transactions or options (long positions) in cross margin mode, the available balance of the relevant cryptocurrency must be sufficient to cover the order requirements. This distinction between available equity and available balance is crucial for understanding your trading capacity across different instrument types.
Practical Trading Examples
Consider a scenario where a user holds various BTC positions and open orders:
- BTCUSDT Margin (Isolated): Long position with 5x leverage, 100 BTC position margin, 200 BTC open order margin
- BTCUSDT Margin (Cross): Long position with 5x leverage, 100 BTC position margin, 200 BTC open order margin
- BTCUSD Quarterly Futures (Cross): Long position with 1x leverage, 10 BTC position margin, 20 BTC open order margin
If this user attempts to open a new long margin position with 200 BTC at 5x leverage, the required margin would be 40 BTC (200/5). The total "in use" calculation would sum all existing commitments (530 BTC in this example). With a cross margin account balance of 700 BTC and floating PnL of 15 BTC, the free margin would be 185 BTC, allowing the order to proceed successfully.
However, if the same user attempted a futures trade requiring 200 BTC margin, the free margin of 185 BTC would be insufficient, causing the order to fail. These examples demonstrate the importance of calculating your available margin before placing orders.
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Margin Positions in Cross Margin Mode
Position Analysis Metrics
Several specialized metrics help traders understand their margin positions in cross margin mode:
Assets represent the amount of positive assets in a position, excluding the margin amount itself. This differs from isolated margin positions where margin is transferred into the position.
Available asset indicates the amount of positive assets available to close a position, which is crucial for understanding your exit capacity.
Liability calculations vary based on position direction and margin currency. Long positions typically calculate liability in quote cryptocurrency, while short positions often use base cryptocurrency for liability calculations.
Average open price computation follows specific rules that differ from futures calculations. The system maintains the original position size for averaging purposes rather than deducting previously closed portions.
Estimated liquidation price serves as a reference point for when cross positions might meet liquidation conditions. However, this calculation becomes unavailable when options positions or non-USDT pair margin positions exist in cross margin mode.
Initial Margin Requirements
In cross margin mode, both tokens of a trading pair can serve as margin for long or short positions. For example, when trading BTC/USDT, you can choose either BTC or USDT as your margin cryptocurrency.
If you open a long position of 1 BTC using 10x leverage with BTC as margin, you'll need 0.1 BTC as margin requirement. The filled price determines your borrowing needs—at 10,000 USDT/BTC, you would need to borrow 10,000 USDT. Notably, the margin remains in your account balance rather than being transferred to the position, distinguishing it from isolated margin mechanics.
Position Closure Mechanisms
Closing positions in cross margin mode follows different protocols depending on whether position assets and margin use the same cryptocurrency.
Same cryptocurrency for assets and margin typically occurs in:
- Long positions using base crypto as margin with quote crypto liability
- Short positions using quote crypto as margin with base crypto liability
The closure principle allows only available assets to be used for closing positions. Traders can close positions by paying off liabilities and can choose "reduce only" options. The available asset calculation considers both position assets and part of the account balance equity, ensuring that closing one position doesn't adversely affect others.
Different cryptocurrencies for assets and margin typically involves:
- Short positions with base crypto as margin and base crypto liability
- Long positions using quote crypto as margin with quote crypto liability
In these cases, only position assets can be used to close positions. The position closes when all position assets are sold, with any remaining liabilities settled from account equity. The available asset for closing simply equals the position assets.
Expiry and Perpetual Futures in Cross Margin
Cross margin mode supports both Hedge mode and One-way mode for expiry and perpetual futures trading, providing flexibility for different trading strategies.
Key position metrics for futures include:
Total position representation where long positions show as positive numbers and short positions as negative numbers in one-way mode.
Available position specifically shown in Hedge mode, calculated as total positions minus positions of open close orders.
Floating PnL calculations differ between crypto-margined and USDT-margined contracts, with formulas accounting for position direction and pricing mechanisms.
Initial and maintenance margin requirements also vary based on margin currency and contract specifications, requiring careful attention to position sizing and risk management.
Options Trading in Cross Margin Mode
Options trading in cross margin mode enables both long and short positions with specific characteristics:
Total position tracking with long positions as positive numbers and short positions as negative numbers.
Options value calculation depending on whether pricing uses cryptocurrency or contract numbers as the unit of measurement.
Floating PnL computation based on the difference between mark price and average open price, multiplied by position size and multiplier.
Notably, initial and maintenance margin requirements differ significantly between long and short options positions. Long positions typically require no margin, while short positions have specific calculation methods that account for potential obligations.
Risk Assessment Framework
Futures Mode's cross margin approach employs a dual-layer risk assessment system to protect traders from excessive risk exposure.
Order Cancellation Protocols
The risk control system may cancel orders when accounts approach dangerous risk levels but haven't yet triggered pre-liquidation verification. This proactive measure helps maintain accounts within safe operating parameters and prevents sudden order cancellations due to liquidation triggers.
Specific rules govern these cancellations, focusing on available equity relative to maintenance margin requirements and open order commitments. When available balance falls below zero, the system cancels specific order types to protect account stability.
Pre-Liquidation Verification
Liquidation triggers when the maintenance margin ratio reaches 100%. The system issues warnings when this ratio falls below 300%, alerting traders to increasing risk levels. OKX reserves the right to adjust these parameters based on market conditions.
When the maintenance margin ratio hits 100%, the system cancels orders according to specific rules that vary by business line and trading mode. These targeted cancellations aim to reduce risk without unnecessarily disrupting trading strategies.
If order cancellations don't restore the account to safety, liquidation proceedings begin through a three-phase process:
- Reverse position liquidation: The system first addresses long and short reverse positions of the same contract in Hedge mode
- Delta-hedged position liquidation: When phase 1 isn't applicable or sufficient, the system liquidates positions that offset each other in terms of delta value while attempting to maintain overall account delta
- Unhedged position liquidation: As a last resort, the system liquidates remaining unhedged positions, prioritizing those with the best risk reduction effect
This graduated approach aims to minimize disruption while effectively managing risk exposure.
Frequently Asked Questions
What is the main advantage of cross margin trading?
Cross margin trading allows multiple positions to share a common margin pool, increasing capital efficiency. Profits from one position can offset losses in another, potentially reducing margin requirements. This approach is particularly beneficial for diversified trading strategies across multiple instruments.
How does liquidation work in cross margin mode?
Liquidation occurs when the maintenance margin ratio reaches 100%. The process follows a three-phase approach: first addressing reverse positions, then delta-hedged positions, and finally unhedged positions. This graduated method aims to minimize disruption while effectively managing risk exposure across your portfolio.
Can I use both cross and isolated margin positions simultaneously?
Yes, Futures Mode allows you to maintain positions in both cross and isolated margin modes simultaneously. This flexibility enables traders to isolate risk on specific positions while benefiting from cross-margin efficiency on others. However, careful management is required to understand overall risk exposure.
What happens to my open orders during risk events?
During risk events, the system may cancel certain open orders to maintain account safety. The specific orders canceled depend on your risk level and position types. Orders that increase risk exposure are typically canceled first, while those that reduce risk may be maintained to help stabilize your account.
How is leverage calculated in cross margin mode?
Leverage is calculated as position value divided by the sum of your balance in cross positions plus floating PnL in cross margin positions. Position value calculations vary by instrument type, making accurate computation essential for proper risk management across your diversified portfolio.
What is the difference between available equity and available balance?
Available equity refers to assets that can be used for trading margins, futures, and options short positions. Available balance covers assets for isolated positions, spot trading, and options long positions. Understanding this distinction is crucial for effective trade planning and risk management.