Margin vs. Futures Trading

Margin trading and futures trading are two methods of trading crypto assets that allow traders to access greater sums of capital to leverage their positions and potentially amplify profits. However, there are key differences between the two products that traders should be aware of.

Markets and Trading Assets

Margin traders place orders to buy or sell cryptocurrencies in the spot market, where orders are matched with orders in the Spot Markets. On the other hand, futures traders place orders to buy or sell contracts in the derivatives market. In summary, margin and futures trading takes place in two different markets.

Leverage

Margin traders have access to up to 3X leverage with assets provided by the platform, based on whether they are using isolated margin or cross margin mode. In contrast, futures contracts offer higher leverage, enabling traders to potentially realize larger profits.

Collateral Allocation

Platform’s Futures and Margin trading both allow traders to switch between "Cross Margin" and "Isolated Margin" modes, enabling them to allocate their funds to a cross position or isolated positions to share collateral and control risks reasonably.

Trading Fees

Margin trading allows users to borrow funds from the platform, with the loan's interest rate calculated for the next hour. Users repay the borrowed funds afterwards and must ensure that their assets are sufficient to avoid being liquidated.

In contrast, futures trading uses maintenance margin as collateral, meaning there is no repayment, but users must ensure that their collateral is sufficient. Both margin and futures trading charge users a trading fee, with margin trading's trading fee being the same as the Spot's fee.

Funding Rate

Due to the price difference between Perpetual Futures and Quarterly Futures, the funding rate is used to force convergence of prices between the Perpetual Futures Market and the actual underlying asset. Please note that only Perpetual Futures will charge traders the funding rate.