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1. Isolated Margin
If isolated margin mode is adopted, traders can hold both long and short positions in both directions. When liquidation happens, the trader will only lose the margin in a particular position, which means the maximal loss for this trader equals the value of the margin. If the trader closes the position, the system will calculate the profit and loss of your long and short positions respectively into your account balance immediately.
Pros: If the price is affected by the volatile market and the trader's position is liquidated, the loss will be calculated solely in each isolated position and will not affect other positions in the U-Future Account.
If the trader owns 100 USDT in the U-Futures Account and the maintenance margin for opening the isolated position values 50 USDT. When liquidation occurs, the trader loses 50 USDT as margin while keeping the rest 50 USDT in the account balance.
2. Cross Margin
In the cross margin mode, all assets in a user’s account will be considered as the margin. The liquidation will happen only when the position loss exceeds the overall margin balance.
The risk tolerance level is higher in cross margin mode and it allows users to easily operate and calculate positions.
If a trader has 100 USDT in the U-Futures account and uses 50 USDT to open a long position in the cross margin mode. In this case, 100 USDT is the total margin for this position. When liquidation happens, the trader will lose 100 USDT in the account balance, which means the account balance will be 0 USDT.