BingX Perpetual Futures has introduced the Auto Margin Addition feature for the isolated margin mode. Let's delve into the details.
1. What is Auto Margin Addition in Isolated Margin Mode?
Due to the isolated nature of the funds in isolated margin mode, there is a risk of forced liquidation even when there is sufficient available margin in the user's Futures Account.
Auto Margin Addition is a feature that allows traders to automatically add margin to their existing isolated margin position with the purpose of avoiding forced liquidation. Once the Auto Margin Addition feature is enabled, whenever your position is about to trigger forced liquidation, the system will add an amount that you set to the position, thereby reducing the risk of forced liquidation.
This feature is turned off by default. Users need to go to the "Position" and select "Auto Margin Addition" to manually enable it.
Note:
1. If the available margin in your Futures Account is less than the amount set, then the actual added amount will be your available margin. However, this could result in the loss of all available margin in your Futures Account in extreme cases.
2. When the Auto Margin Addition is triggered, the system will cancel pending orders (if any) of the trading pair that occupy margin. This ensures that there are sufficient funds for automatic margin addition, thereby reducing the risk.
3. After the margin is added, if the position risk calculated according to the current mark price is still ≥ 100%, the available margin in the futures account is ≤ 0, and there are no pending orders (for opening positions) that can be canceled under the current margin account, the system will take over the liquidated contract at the bankruptcy price.
2. Examples of How Does Auto Margin Addition Work
A trader with an available balance of 2,500 USDT in his/her Futures Account opens a position with information as follows:
Trading Pair: BTCUSDT
Open Price: 20,000 USDT
Open Amount: 0.5 BTC
Position Side: Long
Leverage: 10x
Initial Margin Used: 1,000 USDT
Estimated Liquidation Price: 18,069.2 USDT
Remaining Available Margin: 1,500 USDT
Margin Addition Amount Set: 1,000 USDT
When the mark price falls to 18,069.2 USDT, which is the liquidation price, the system will automatically add margin to the position to prevent forced liquidation.
Margin Addition Amount: 1,000 USDT
Remaining Available Margin: 500 USDT
New Estimated Liquidation Price: 16,061.5 USDT
New Initial Margin: 2,000 USDT
If the price of BTC/USDT continues to fall and reaches the new liquidation price of 16,061.5 USDT, the Auto Margin Addition will kick in again. At this time, the available balance in the Futures Account is less than the margin set by the user:
Margin Addition Amount: 500 USDT
New Estimated Liquidation Price: 15,057.7 USDT
Now there is no available margin left in the Futures Account. When the price reaches 15,057.7 USDT, the position will be liquidated as the Auto Margin Addition cannot work in case of no available margin.
BingX Operation Team
2023-09-04