Cross-Margin vs Isolated Margin
Margin mode determines how collateral backs leveraged positions on a derivatives exchange. In cross-margin, all positions share one pool of collateral and can offset each other. In isolated margin, each position has a dedicated collateral allocation that cannot be drawn from by other positions.
✦ Key Insight
Margin mode dictates exactly how a single bad trade impacts the rest of your account. Choosing the wrong mode is one of the most common reasons traders blow up their entire balance on a position they thought was contained.
✕ Common Misconceptions
Using cross-margin for speculative positions you can afford to lose, then losing the rest of your account.
Using isolated margin and getting prematurely liquidated despite having idle balance available.
Switching modes mid-trade without checking the new margin requirement.
Detailed Explanation
How It Works: Cross-margin uses your full balance as a buffer, so winning trades' unrealized P&L can prevent a losing trade from being liquidated — but a runaway loser can also pull down the whole account. Isolated margin draws a hard line: when the allocated collateral is gone, only that position liquidates.
FAQs:
Which is safer? Isolated, generally — it caps downside per trade.
Can I mix both? Most exchanges let you assign a mode per position or sub-account.
In Practice
Dig Deeper
Perpetual Futures
Perpetual Futures (Perps) Perpetual futures, often called perpetuals or perps, are derivative contracts that track the price of an underlying crypto asset without having a fixed expiry date.
Margin
Margin is the collateral a trader provides to open and maintain a leveraged trading position. It is not the same as the total value of the position.
Liquidation
Liquidation occurs when a leveraged trading platform forcibly reduces or closes a position because the trader no longer has enough margin to satisfy the required maintenance margin.