Cross Margin Trading Shows a Lot of Potential, But Why Can it Gain More Popularity?

LONDON, Dec. 17, 2020 /PRNewswire/ -- Recently, Huobi Futures released data that showed it had reached over $2.6 Billion cumulative trading volume since its launch two years ago exactly. This is an impressive feat and speaks not only to the excitement around futures trading in the cryptocurrency space, but also the products being offered by Huobi.

Among the various product lines of Huobi, USDT-margined Swaps is growing strongly, accounting for 22.7% of the trading volume of all units as of December 3. Along with the new function cross margin mode, which will be available on WEB, APP and API.

Cross Margin, also known as "Spread Margin" is a margin method that utilises the full amount of funds in the Available Balance to avoid liquidations. Any Realised P&L from other positions can aid in adding margin on a losing position.

This margin method is useful for users who are hedging existing positions and also for arbitrageurs that do not wish to be exposed on one side of the trade in the event of a liquidation.

Margin Trading Proves Popular at Huobi

Coin-margined futures trading was launched in December 2018 at Huobi. Its trading volume ranked first in the derivative market only eight months after launching. At present, Huobi's coin-margined futures trading includes 13 major crypto assets, with a unilateral turnover of $1.9 billion since its launch. 

Coin-Margined Swaps have also seen much success as,  45 days after the launch on March 27th, Huobi's coin-margin swaps trading volume has surpassed BitMEx, and it remains to be the No. 1 Coin-margined Swaps market in the world. From November, the cumulative trading volume of coin-margined swaps has reached $640.2 billion.

Then, onto the most popular version, trading volume of Huobi USDT margined perpetual swaps is growing rapidly with a cumulative total of over $60.5 billion as of December 4th, 2020.

How Cross Margin Trading can Boost Trading Further

In Cross Margin mode, the entire margin balance is shared across open positions to avoid liquidation. If Cross Margin is enabled, the trader risks losing their entire margin balance along with any open positions in the event of a liquidation. Any realized PnL from another position can aid a losing position that is close to being liquidated.

Typically, Cross Margin is the default setting on most trading platforms, as it is the more straightforward approach suitable for novice traders.

The benefit of a cross margined account is particularly useful in volatile markets that are witnessing extreme fluctuations, such as cryptocurrencies, whereby the predictability of margin requirements is difficult to gauge. This is especially true for long-term strategies implemented by traders.

It is for this reason that the use of Cross Margin mode is very suitable for a large cohort of cryptocurrency traders because despite the high volatility, many traders are looking to hold onto cryptocurrency for a longer term.

SOURCE Huobi Futures