What Is Isolated/Cross Margin Mode? Understanding Bybit's Margin Systems

The Relationship Between Leverage and Margin

All trading or investment involves balancing profitability and risk management. Leverage serves as the primary tool for weighing these two components. On Bybit, leverage primarily adjusts the initial margin rate used for trades. Margin acts as collateral, representing the risk a trader is willing to take for an investment.

• Higher Leverage = Smaller Margin → More contracts tradable with the same balance (amplifies gains) but brings liquidation prices closer to the entry price (higher risk of liquidation).
• Lower Leverage = Larger Margin → Fewer contracts tradable (limits profit potential) but liquidation prices are farther from entry (greater loss tolerance).

Bybit's Two Margin Systems

Bybit offers two margin modes:

Isolated Margin Mode

• Definition: Positions have segregated margin independent from the trader's account balance.

• Key Features:

  • Traders freely select leverage multiples.
  • Maximum loss = position margin if liquidated.
• Example: A trader opens a 1,500 BTCUSD position at $10,000 with 1x leverage (0.15 BTC margin). Adjusting leverage to 3x reduces margin to 0.05 BTC. If liquidated, only 0.05 BTC is lost (excluding fees).

Cross Margin Mode (Default)

• Definition: Uses all available balance of the corresponding currency as position margin to prevent liquidation.

• Key Features:

  • Liquidation results in losing all assets in that currency.
• Example: A BTCUSDT liquidation costs all USDT balance but spares BTC holdings.

Switching Margin Modes Mid-Trade

Traders can switch modes anytime in the order panel. Changes apply to open positions, active orders, and conditional orders. Adjusting margin alters liquidation prices, provided:

• Account has sufficient margin.
• Changes don’t trigger immediate liquidation.

Leverage Adjustment in Cross Margin

• New Users (post-August 9): Default 10x leverage for BTCUSDT (contract value/10).
• Existing Users: Default maximum leverage (e.g., 100x for BTCUSDT at minimum risk limit).

Calculating Position Size:

Contracts = Initial Margin × Leverage / Entry Price

Example:
1,000 USDT margin at $30,000/BTC:

• 100x → 3.333 BTC
• 50x → 1.666 BTC
• 10x → 0.333 BTC

Maintenance Margin: Same as isolated mode = Contract Value × Maintenance Margin Rate.

Impact of Leverage Changes on Liquidation Price

• Single Position, No Orders: Unaffected (position size/entry price/assets unchanged).
• Single Position + Active Orders: Affected. Higher leverage frees margin for orders, increasing available balance.
• Multiple Positions (Shared Asset): Affected. Adjusting leverage redistributes margin, impacting other positions’ liquidation risks.

Effective Leverage in Cross Margin

Automatically calculated based on position value vs. max potential loss (available balance + position margin).

Effective Leverage = Contract Value / (Position Margin + Available Balance ± Unrealized PnL)

Higher effective leverage → Higher liquidation risk.

Leverage and Unrealized PnL

• No Direct Effect: Leverage changes adjust initial margin but not position quantity (QTY). Unrealized PnL remains unchanged.
• PnL % Impact: ROI% increases if leverage rises (due to reduced margin, not higher PnL).

Formulas:

• Isolated: PnL% = PnL / (Initial Margin + Fees + Additional Margin) × 100%
• Cross: PnL% = PnL / (Initial Margin + Fees) × 100%

FAQ Section

Can I switch margin modes after opening a position?

Yes, changes apply immediately to open positions/orders if sufficient margin exists.

Does leverage affect liquidation price in cross margin?

Only if:

1. Active orders exist, or
2. Multiple positions share assets.

Why does PnL% change with leverage?

Higher leverage reduces initial margin, making the same PnL a larger percentage of the smaller margin.

How is maintenance margin calculated?

Identical in both modes: Contract Value × Maintenance Margin Rate.

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