Trading in the spot and futures cross margin mode allows users to leverage assets across multiple positions, increasing capital efficiency while managing risk within a unified margin framework. This comprehensive guide explores the mechanics, rules, and strategic considerations of cross margin trading, focusing on position management, margin calculation, and closing procedures.
Understanding Key Position Metrics
When trading a margin pair in spot and futures cross margin mode, several critical metrics define your position’s status:
- Assets: The total positive balance held in the position, excluding the margin itself.
- Available Asset: The portion of assets that can be used to close a position. This depends on account equity and margin requirements.
- Liability: Comprises initial borrowed funds plus accrued interest. For long positions, liabilities are denominated in the quote currency; for short positions, in the trading currency.
- Interest: Accumulated but not yet deducted borrowing costs.
- Avg. Open Price: Calculated as a weighted average:
(Original holding amount × Original Avg. Open Price + New holding amount × Filled Price) / (Original + New holding amount) - Est. Liquidation Price: The price at which a position may be liquidated due to insufficient margin. Note: Cannot be calculated if options or non-USDT margin pairs exist in single-currency mode, or when USDT-mode contracts have different underlyings.
P&L (Profit & Loss): Unrealized gains or losses based on current mark price and liability:
- Long (margin in trading currency):
Total assets - (liability + interest) / mark price - Long (margin in quote currency):
Total assets × mark price - (liability + interest) - Short (margin in quote currency):
Total assets - (liability + interest) × mark price - Short (margin in trading currency):
Total assets / mark price - (liability + interest)
- Long (margin in trading currency):
- P&L Ratio:
P&L / Initial Margin Initial Margin: Varies by position type and margin currency:
- Long (trading as margin):
(liability + interest) / (mark price × leverage) - Short (trading as margin):
(liability + interest) / leverage - Short (quote as margin):
(liability + interest) × mark price / leverage - Long (quote as margin):
(liability + interest) / leverage
- Long (trading as margin):
Maintenance Margin: The minimum required to avoid liquidation:
- Long (trading as margin):
(liability + interest) × MMR / mark price - Long (quote as margin):
(liability + interest) × MMR - Short (quote as margin):
(liability + interest) × MMR × mark price - Short (trading as margin):
(liability + interest) × MMR
- Long (trading as margin):
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Initial Margin Principles
In spot and futures cross margin mode, both tokens in a trading pair can serve as margin for long or short positions. This flexibility enhances capital utilization.
For example, with the BTC/USDT pair:
- You can use either BTC or USDT as margin to open long or short positions.
Example Scenario:
Opening a 1 BTC long position at 10× leverage with a fill price of 10,000 USDT/BTC:
- If using BTC as margin: Required margin = 0.1 BTC (account equity must be ≥ 0.1 BTC).
- Liability: 10,000 USDT borrowed upon execution.
- Before execution: No interest accrues, but margin is reserved.
- After execution: Position shows 1 BTC in assets, 10,000 USDT in liability. The 0.1 BTC margin remains in your account balance—unlike isolated margin, it’s not moved into the position.
This structure allows better liquidity management and supports dynamic risk allocation across positions.
Closing Positions: Same Asset and Margin Currency
When the position asset and margin currency match (e.g., using BTC to open a BTC long, or USDT to open a USDT short), closing follows specific rules focused on available assets.
Available Asset Calculation
Unlike isolated margin, available assets may include not just position holdings but also portions of account equity—provided overall risk isn't compromised.
Conditions:
- If coin equity ≥ initial margin:
Available asset =(|liability + interest|) × (1 + IMR%) / mark price(long)
or(|liability + interest|) × (1 + IMR%) × mark price(short) - If coin equity < initial margin:
Available asset =(|liability + interest|) × (1 + MMR%) / mark price(long)
or(|liability + interest|) × (1 + MMR%) × mark price(short)
Closing Methods
| Method | Rules | Example |
|---|---|---|
| Market Close All | Pay off liabilities; remaining assets return to account. Default is “reduce only.” | Long position: 2 BTC asset, 10,000 USDT liability, $10 interest. System sells BTC until $10,020 received. Remaining BTC goes to balance. |
| Limit Price Close | Can oversell; once liability paid, position closes. Excess transferred to balance. | Sell 0.5 BTC → pays partial liability. Later sell 1 BTC → clears debt → closes position. Remaining 0.5 BTC + surplus USDT returned. |
| Reduce Only + Reverse | After closing, excess funds open reverse position using available account equity. | Short position: Buy 1.5 BTC when liability is 1 BTC → closes short, opens long with leftover $10,000 and $1,000 margin from balance. |
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Closing Positions: Different Asset and Margin Currency
When asset and margin currency differ (e.g., using USDT to open a BTC long), only the position asset can be used to close.
Key Rule:
- Selling all position assets triggers closure.
- If proceeds don’t cover liabilities, the deficit is settled from account equity.
Available Asset = Position Assets
| Method | Rules | Example |
|---|---|---|
| Market Close All | Sell all assets at market; remaining funds or deficits settled from balance. | Long: 2 BTC sold at $9,000 → $18,000 → pays $10k liability → $8k to balance. If sold at $2,000 → $4k → $6k deficit covered from USDT balance. |
| Limit Price Close | Sell in parts; position remains open until full asset sale. | Sell 1 BTC at $15k → pays liability → $5k surplus to balance. Still holds 1 BTC → position active. Final sale closes it. |
| Reduce + Reverse | After full sale and closure, surplus opens reverse position using account equity. | Short: Buy 2.5 BTC using $25k of $30k USDT asset → pays $20k liability → remaining $5k used with additional $10k borrowed to open long with $0.1 BTC margin. |
Frequently Asked Questions
Q: What is spot and futures cross margin mode?
A: It’s a unified margin system where assets across spot and futures can back multiple positions, improving capital efficiency compared to isolated margin.
Q: Can I use either token in a pair as margin?
A: Yes. For BTC/USDT, you can use BTC or USDT as collateral for long or short positions.
Q: How is liquidation price estimated?
A: It depends on mark price, liabilities, and maintenance margin ratio. However, it cannot be calculated if non-USDT pairs or options are present in single-currency mode.
Q: What happens if I can’t fully repay my liability when closing?
A: The shortfall is automatically deducted from your account balance in the relevant currency.
Q: Is “reduce only” enabled by default?
A: Yes. All closing methods default to “reduce only” to prevent unintended position increases.
Q: Can I open a reverse position when closing?
A: Yes, using the “reduce + reverse” option. The system first closes the current position, then uses excess funds and available equity to open a new opposite-direction trade.
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Final Thoughts
Spot and futures cross margin mode offers sophisticated traders greater flexibility and efficiency by pooling margin resources across instruments. By understanding how initial margins are calculated, how available assets are determined, and how different closing methods affect outcomes, traders can better manage risk and optimize returns.
Whether you're opening a leveraged long with native asset collateral or closing a short with reverse intent, mastering these mechanics is key to navigating volatile markets with confidence.
Remember: Leverage amplifies both gains and losses. Always assess your risk tolerance and use stop-loss strategies where possible.