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Technical Definition

Cross Margin

Margin mode where all account balance and unrealized profits/losses are shared as collateral across all open positions.

By Crypto University Editorial
Isolated MarginMargin CallAuto-Deleveraging (ADL)

✦ Key Insight

Why It Matters: Profits from winning trades can offset losses in others, reducing liquidation probability. Suited for portfolio hedging but riskier overall. How It Works: Entire futures wallet acts as one pool. Liquidation occurs only if total margin falls below requirements. Common Mistakes: O

✕ Common Misconceptions

It is often mistaken for similar sounding terms, but the technical implementation is distinct.

Detailed Explanation

Why It Matters: Profits from winning trades can offset losses in others, reducing liquidation probability. Suited for portfolio hedging but riskier overall. How It Works: Entire futures wallet acts as one pool. Liquidation occurs only if total margin falls below requirements. Common Mistakes: Over-leveraging the whole account (cascading liquidations); poor position correlation. FAQs Safer in volatile markets? Often yes, due to offsetting, but one black swan can affect everything. Switchable? Most CEX allow changing modes (with restrictions).

In Practice

“Long ETH profitable (+$500) helps keep a losing BTC short open longer in cross mode.”

Dig Deeper

Isolated Margin

Margin mode where a fixed amount of collateral is allocated to one specific position only; losses are limited to that allocation.

Auto-Deleveraging (ADL)

A risk-control mechanism on futures exchanges where highly profitable leveraged positions are forcibly reduced/closed to cover losses of bankrupt positions.

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