Understanding the nuances of margin trading modes is essential for optimizing your capital efficiency and risk management in the digital asset space. Two prominent methods, multi-currency margin and portfolio margin, offer distinct approaches to handling collateral and calculating requirements. This guide breaks down their core concepts, differences, and practical applications to help you choose the right mode for your trading strategy.
Key Concepts and Definitions
Before diving into the comparison, it's crucial to grasp some fundamental terms used across both margin modes.
Basic Margin Concepts
- Equity: The total value of a specific cryptocurrency in your cross-margin account and isolated positions. It includes your balance, floating PnL, options market value, and accounts for accrued interest.
- Free Margin: The amount of a specific crypto available to open new positions in expiry futures, perpetual futures, or options (short positions). It is calculated as the maximum of zero or your crypto balance plus floating PnL minus any amount already in use.
- Available Balance: The quantity of crypto that can be deployed for isolated positions, spot trading, or options (long positions). This is primarily used for order calculations.
- Floating PnL: The unrealized profit or loss from all margin, futures, and options positions settled in a particular cryptocurrency, encompassing both cross and isolated margin modes.
- Account Equity: The total fiat value of all cryptocurrencies in your account, derived by summing each crypto's equity multiplied by its current price.
- Margin Level: A ratio of your adjusted equity to the sum of maintenance margin and liquidation fees, indicating your account's health relative to its obligations.
Portfolio Margin Specific Terms
- Maintenance Margin Requirement (MMR): In portfolio margin mode, this is calculated using risk units. It simulates the maximum potential loss of a portfolio under specific market conditions by grouping instruments by their underlying crypto.
- Initial Margin Requirement (IMR: Typically set at 1.3 times the MMR, this is the margin needed to open new positions.
- Risk Factor (MR): The margin calculation incorporates stress tests across multiple risk dimensions (MR1-6 and MR9) and applies a minimum charge (MR7) to cover fees and slippage.
- Risk Unit: A grouping of all derivatives (like futures and options) based on their underlying cryptocurrency. For example, all BTC-based derivatives (BTC-USD, BTC-USDT, etc.) form a single BTC risk unit, allowing for risk offsetting.
- Spot in Use: The amount of spot assets allocated to hedge the delta exposure of derivatives within a risk unit. This can be adjusted by the trader.
- Scenario-Based Margin Calculation: A sophisticated model that calculates maintenance margin by evaluating potential losses across nine stress-test scenarios, offering significant discounts for well-hedged portfolios.
Example of a Risk Unit: An ETH risk unit could include ETHUSDT and ETHUSDC perpetual futures, expiry futures, options orders, and ETH/USDT and ETH/USDC spot orders.
Comparing Multi-Currency and Portfolio Margin Modes
| Feature | Multi-Currency Margin Mode | Portfolio Margin Mode |
|---|---|---|
| Tradable Instruments | All (Spot, Margin, Futures, Options) | All (Spot, Margin, Futures, Options) |
| Prerequisite | Equity > $10,000 USD | Equity > $10,000 USD |
| Collateral Assets | All assets can be used as collateral. Their USD value is applied with a tier-based discount rate. Unrealized PnL can be used as equity. | All assets can be used as collateral. Their USD value is applied with a tier-based discount rate. Unrealized PnL can be used as equity. |
| Option Value Treatment | Only the value of short option positions is considered as available margin in cross-mode. Long options are isolated. | Both long and short option positions are evaluated in cross-margin mode, making their full value available as margin. |
| Position Margining | Positions are margined independently based on their specific instrument and position tiers. | Positions are grouped by risk unit. Margin is calculated holistically based on the net risk of the portfolio across various scenarios. Spot assets can be included to offset delta risk. |
Practical Examples and Scenarios
To illustrate the differences, let's examine how each mode performs under various trading strategies. The following examples use simulated data.
Large Delta-Neutral Positions
- Assets: 10 BTC
- Positions: A mix of short futures, long perpetual swaps, and short call options across different BTC contracts.
Multi-Currency Margin (10x Leverage):
- IMR: ~961,956 USD
- MMR: ~192,371 USD
Portfolio Margin:
- IMR: ~168,947 USD
- MMR: ~129,959 USD
- Note: Approximately 8 BTC of spot is used for hedging.
Conclusion: Portfolio margin mode is vastly superior for large, hedged positions. It allows the use of spot assets to reduce margin requirements, a feature not available in multi-currency mode. The initial margin needed is significantly lower.
Small Delta-Neutral Positions
- Assets: 1 BTC
- Positions: A small, mixed portfolio of short and long futures and perpetual swaps.
Multi-Currency Margin (10x Leverage):
- IMR: ~106,374 USD
- MMR: ~5,503 USD
Portfolio Margin:
- IMR: ~8,132 USD
- MMR: ~6,035 USD
Conclusion: The maintenance margin (MMR) is slightly lower in multi-currency mode, but the difference is minimal. The key advantage of portfolio margin here is the dramatically lower initial margin required to open positions.
Delta-One Positions (Single-Directional)
- Assets: None
- Positions: A large, primarily short portfolio across various BTC futures and perpetuals.
Multi-Currency Margin (10x Leverage):
- IMR: ~154,651 USD
- MMR: ~7,775 USD
Portfolio Margin:
- IMR: ~284,621 USD
- MMR: ~188,823 USD
Conclusion: For single-directional, unhedged traders, multi-currency mode is far more capital-efficient. Portfolio margin calculations are designed for hedged portfolios and become inefficient for one-sided bets.
How to Simulate and Compare Modes
Most modern trading platforms offer tools to help you decide which mode is best for your strategy.
Using Demo Trading: You can experiment with both modes in a risk-free demo environment located within the trading interface. This allows you to see the real-time impact on your equity, MMR, and margin level.
Leveraging the Position Builder: The most effective tool for comparison is a position builder. This feature allows you to simulate new positions or add them to your existing ones to see the exact IMR and MMR requirements for both multi-currency and portfolio margin modes. 👉 Explore advanced margin simulation tools
To switch between模拟 views, look for the account mode settings, usually found in the trade settings or a top-right corner menu within the builder.
Frequently Asked Questions
What is the main advantage of portfolio margin mode?
Portfolio margin mode offers superior capital efficiency for traders with complex, hedged portfolios. By evaluating risk holistically across a "risk unit," it often results in significantly lower margin requirements compared to the linear method used in multi-currency mode.
Can I use spot holdings to reduce my margin requirements?
Yes, but only in portfolio margin mode. This mode allows you to allocate spot assets to a specific risk unit to offset the delta risk of your derivatives positions, thereby lowering your overall maintenance margin requirement.
Which mode is better for a beginner trader?
For beginners or traders with simple, directional strategies, multi-currency margin mode is often more straightforward and predictable. Portfolio margin is better suited for advanced traders employing sophisticated hedging strategies.
How does the system treat options differently between the two modes?
In multi-currency mode, only short option positions contribute to your available margin. Long options are treated as isolated positions. Portfolio margin mode is more flexible, considering the value of both long and short options as available margin.
Is there a minimum equity requirement for these modes?
Yes, both multi-currency and portfolio margin modes typically require a minimum account equity of $10,000 USD to activate. This ensures traders have sufficient capital to manage the risks involved.
If my portfolio becomes unhedged, will my margin requirements change?
Absolutely. The core benefit of portfolio margin is its sensitivity to net risk. If a hedged portfolio becomes directional (e.g., a hedge is removed), the margin requirement will recalculate and likely increase substantially, as shown in the delta-one example.