Liquid, a Japanese cryptocurrency trading platform, is all set to “redefine and improve” the conventional crypto trading experience. It is now introducing both cross and isolated margin trading.
The reason behind this move, according to a statement from Liquid, is to enhance the typical trading experience. They will basically rely on the new experience to boost and help leverage traders in the now-volatile crypto market.
The statement acknowledged the fact that the markets are highly volatile and leveraged positions usually are susceptible to it. It further adds that because isolated margin mode tends to work well in speculative positions, the company is thus adopting it.
From Cross-Margin to Isolated Margin
Before Liquid chose to go down this path, it was only the Quoine subsidiary that had this cross-margin trading services, although theirs is unique. Ideally, margins in this subsidiary, are split between two open positions, although everything's subject to the wallet balance that the client has.
Liquid is confident that by introducing cross-margin trading, they will have significantly reduced the traders' risk of liquidation. How the strategy helps achieve this is interesting – any profits and losses gained from closed positions are further invested in the margin on
“open losing positions.”
Among those who will undoubtedly benefit from this margin, method are those who often hedge existing trading positions as well as arbitragers. Both will avoid getting exposed to one part of a trade in case of liquidation.
Isolated margin style of trading often involves having the margin in one isolated position, far from other positions. As per Liquid, the maximum that one stands to lose as a result of liquidation is only the margin placed on the position.
One distinctive aspect of it, therefore, concerns the whole issue of managing the risk in each position better. In it, you essentially modify the amount of margin for every position individually. This, of course, contrasts with what forms the heart and soul of the cross-margin method.
The good thing with someone proficient in both, however, is that Liquid will be offering both. This Japanese cryptocurrency startup recently earned the prestigious “Unicorn” status, a recognition which also frequently go hand-in-hand with over a billion in company valuation.
Meanwhile, Liquid is making an entry into the US market
Liquid, in the wake of this exciting news and the massive recognition, is casting its eyes on the rewarding American market. It already has a deal with Virtual Currency Partners and is both working towards launching a joint venture.