Topic: Liquidation Price when shorting on Binance Margin (Read 129 times)

Liquidation only happens when the current price of the coin hits your SL target. Liquidation mostly happen on futures trading and it's very risky. Market is unpredictable and the market can move against you in any point in time. Liquidation can only be cause by futures features. When a trader uses Cross margin, it's somehow safe a little bit because its comprises of two trading position while the isolated margin only consists of a single trade. These future trades are trade based on leverages. The higher the leverage, the higher your Profits and also the higher your risks of getting your account liquidated.

If you are trading with Isolated margin, it will be isolated from rest of your fund, in spot or in cross collateral account.

You will only lose your fund in your Margin account.

• Differences between Isolated margin and Cross Margin
• Isolated margin (Binance Academy)

You will lose all your fund (in your margin account) if you have opened Cross Margin positions. Anyway you can not say Isolated Margin is safer than Cross Margin and vice versa. It all depends upon your risk and margin fund management.

Thanks for the replies....

As stated previously, I shorted BTC around 4 days ago now and I still have the same trade open - which is going pretty well. It's just occurred to me however that I am being charged interest on the 0.28799000 BTC that I borrowed!....

I'm a bit confused as to how much interest I am being charged as, when I select "Borrow" from the trading screen, this comes up:

https://i.postimg.cc/DwqdnhGR/Screenshot-1.jpg

Yet, this is the interest displayed in my margin wallet:

https://i.postimg.cc/63QdrGPN/Screenshot-2.jpg

One says the interested is 0.00041667% and the other says 0.00007057%... which is correct? And, is this being charged hourly?

Also, how do I add images to posts on this forum? I can't work out how to do it!

True if it's isolated margin. Even if you had $2,000 in your margin account. You would lose only the $1,000 you used as collateral to borrow the $9,000. It's a different case however for cross-margin. Any other funds left in your margin account could end up getting liquidated or lost if the price moved in the opposite direction of your open position.

In no case can the broker go onto your spot account in order to cover the margin required for holding a trade-in situation of a liquidation. If such a case happens that you're about to your liquidation price with all margin almost gone he will just liquidate the trade. The worst scenario that might happen will be in case of cross margin in which exchanges use margin from other trades as well, so if you are in profit in a trade and near liquidation in a trade it will calculate your margin requirement on an overall basis and take some margin from the trade in profit. All in All your spot wallet is absolutely safe while making any margin trade.

You are trading an Isolated Margin which means the margin that used for the isolated position is not possible to be move. But if you mean your extra balance outside the margin value committed on your position then you can safely transfer it without affecting your liquidation price. It will only take effect once you are using cross margin since it use all the balance on your account automatically and reflect to your liquidation margin.

When making a trade you have two options first is the isolated you made this is the feature when you make a trade with a designated amount only, the only amount will liquidate is the amount you trade, next we have the cross which is even though you make a small amount of trade still all your futures wallet still in the position, why because in some cases there's a bounce-back that's why they are letting the traders use their balance to prevent getting liquidated their position. In terms of binance wallet they have different wallet, in future trading and spot trading. It will not decrease in spot once you trade in futures also in vice versa.

Only the amount of money in the margin is at risk, not your entire money in your spot account. The liquidation price is the price where you're going to lose your trade when it's trigger, it will automatically close your trade and you need to make another trade if you want to continue trading.

Isolated margin means you're limiting your balance to be blown out by liquidation while Cross margin is the exact opposite of it.

In isolated margin Yes!
If you short or long with 100$ in isolated margin you'll be liquidated when you lose 100$ ( and your remaining balance would be 900$ after 100$ loss. if you had 1000$)

On the other hand, cross margin is different. For example, if you long or short with $100, and you have $1000 in your margin account then your trade won't be closed until you have 1000$ loss. However it won't effect your spot wallet as it is independent/different wallet.

There is a binance article about it, you can read it: Differences Between Isolated Margin and Cross Margin

No, you risk only the amount that you transferred from the spot wallet to a pair with an isolated margin. If you use a cross margin account, then your losses will also be limited to the amount that you transferred to this account. The difference between isolated and cross is that in order to trade on an isolated account, you need to create liquidity for each pair separately, and on a cross account, you can open transactions on several coins.

To enjoy margin (leverage) trading, use future trading.

As for me, 10x margin is too much. Know that the higher your margin ratio, the higher your chance of losing also. Do not focus only the profit, focus on how to significantly minimize losses. My max is 3x margin ratio.

Let me put it like this:

You have your spot account
You have your margin or future trading according
You have a filled order fund, the position that is opened

If you use cross margin, it means funds on your margin or future account is increasing or decreased based on your profit or loss on the active position opened. Example is if you buy (go long) and the market is increasing, your future account fund will be increasing, but if you are losing, your future account fund will be decreasing. To avoid liquidation, you can send funds (collateral) from you other accounts like spot account fund to future account fund.

If you use isolated margin, you will not be able to do so. You will not be able to send collateral from your spot account to your margin or future trading account. Even the remain fund on your future account will not be affected. Assuming you have $100 in you future account, you use $10 to open a position, the remaining $90 in your future account will not be affect, it will remain $90 and only the $10 can liquidate, unlike isolated margin order that it will be affected based on the market price you are using for the trading.

No, you funds in spot account will not be affected in either ways, be it isolated or cross margin, but you will be able to send fund from your spot account to your future account if you use cross margin, unlike isolated margin. But even if you use cross margin, you will still manually need to send the funds from spot account to your future account if there I any need.

Thanks for the reply...

Just to clarify...

Not that I am going to do the following but just to use it as an example....

If I have $1000 in my Margin account and I put it all in a 10x Isolated short trade for $10000 (meaning I am borrowing $9000), the Liquidation Price is then worked out at the exact point where I have lost the full $1000 from my Margin account and I cannot lose any more than this on this trade? is my understanding correct?

The two accounts are isolated/separate do you'll only be risking funds you end up moving from your spot account to your futures one.

I'd recommend keeping the amount you use in futures low for quite a while if you're new and maybe limiting what you do a bit too so it doesn't become gambling (market conditions seem to change quite a bit sometimes so doing trades over a longer period might give you a more accurate perspective).

I've just placed my first ever short trade using the BTC/USDT pairing through Binance Margin (Isolated rather than Cross). I kept the amount very low for my first trade just in case I did anything wrong - but fortunately the trade seems to have gone through ok...

The Isolated trade on Binance allows me to borrow 10x the amount I have transferred into my Margin account. My question is, does the Liquidation Price (shown in the Positions tab) trigger when I have lost all of the money in my Margin account, or, can it access the money in my Spot account as well?

So my question is really... When making a short trade through Binance Margin, am I putting my Spot account at risk or just the money in my Margin account?