1. What is Auto Margin Addition in Isolated Margin Mode?
Automatic margin is a key feature that enhances the security of isolated margin trading. When your position's margin ratio approaches or falls below the maintenance margin requirement, the system will automatically top up the margin for that position from your account balance, preventing forced liquidation due to insufficient margin. This functionality helps mitigate liquidation risk while offering greater trading flexibility in volatile market conditions.
2. What are the advantages of Auto Margin Addition in Toobit Futures Trading?
1）Avoid Forced Liquidation Risk
Futures trading is known for its significant price volatility. If users fail to add margins promptly, they may face liquidation risks. The Auto Margin Addition feature activates when the margin rate falls below a certain threshold and automatically adds a margin to help mitigate losses from delayed manual intervention.
2）Increase Trading Flexibility
Traditional futures trading requires investors to constantly monitor their margin and manually top up funds. With the Auto Margin Addition feature, users can focus on market analysis and strategy without worrying about margin shortages.
3）Reduce the Impact of Market Fluctuations
The Auto Margin Addition effectively stabilizes positions and reduces the risks associated with market volatility. By automatically replenishing the margin, investors can maintain position stability and mitigate losses due to market fluctuations. This feature also helps investors make more rational decisions, avoiding emotional reactions that could lead to poor trading choices.
3. How do I use Auto Margin Addition in Toobit futures trading?
1）Enabling the Feature
Users can enable this feature in Toobit under "Futures Trading > Position Orders (Isolated Margin) > Auto Margin Addition." Once activated, the system will automatically add a margin according to the amount set by the user.
2）Customizing the Margin Amount
Larger margin top-up amounts can offer stronger risk control but may reduce trading flexibility. Therefore, it is recommended that users adjust this amount based on their personal trading strategy and risk tolerance.
Additional Note:
- Monitoring Margin Status: Auto Margin Addition is a risk management tool, but it does not guarantee the avoidance of trading losses. Users should carefully evaluate the risks and benefits of the feature and make informed decisions based on their risk tolerance.
- Margin Addition Amount: If the available margin in your Futures Account is less than the set amount, the system will add only the available margin. In extreme cases, this could result in the loss of all available margin in your Futures Account.
- Fund Transfer: When the reasonable mark price approaches the estimated liquidation price of a position, available funds from your account will be automatically transferred to the position margin. This ensures that the margin rate aligns with the leverage settings configured by the user.
- Feature Reset: The automatic margin call feature resets once a position is fully liquidated. You will need to re-enable it when opening a new position. This feature is only available in isolated margin mode.
Example Situation: Auto Margin Addition Process
A trader has an available balance of 100 USDT. The current price of ETH is 2,700 USDT. He opens a long position for 0.08 ETHUSDT contracts using an initial margin of 43.33 USDT with 5x leverage. With the maintenance margin rate at 2.81%, the liquidation price is calculated to be at 2,181.59 USDT. The remaining available balance would be 56.67 USDT.
Mark Price falls to 2,181.59 USDT and reaches the Liquidation Price. Auto Margin will automatically take over the process and prevent the position from being liquidated. It will use an amount from the available balance to replenish the margin back up to 43.33 USDT, leaving 13.34 USDT left in the available balance. The new liquidation price would now be 1,635.42 USDT, and the initial margin calculated for this position would now be at 86.66 USDT.
Should the price of ETHUSDT continue to fall and reach the new liquidation price of 1,635.42 USDT, Auto Margin Addition will once again come into effect, but this time, only replenish the position with the remaining 13.34 USDT left in the available balance. The new liquidation price of the position would now be at 1,469.35 USDT.
However, as there isn’t any available balance left in the account, should the price hit 1,469.35 USDT, the position would finally be liquidated as Auto Margin Replenishment would not automatically come into effect anymore to prevent the position from being liquidated.
Toobit's Auto Margin Addition feature helps users better manage risk, especially in volatile market conditions. Users should apply this feature flexibly while monitoring market changes and adjusting their strategies on time to mitigate potential risks and avoid losses. We hope this FAQ has answered any questions you may have regarding this feature.