Cross Margin vs Isolated Margin: Which Should You Use?

Choosing between cross margin and isolated margin is one of the most important decisions you'll make as a margin trader. Each mode has distinct advantages and risks that suit different trading styles and experience levels.

Quick Comparison

Cross Margin Explained

In cross margin mode, your entire available account balance serves as collateral for all open positions.

How It Works:

• Open Position A: $2,000 margin → $20,000 position (10x)
• Open Position B: $1,000 margin → $10,000 position (10x)
• Account balance: $10,000
• All $10,000 backs both positions

If Position A loses money, the remaining $7,000 in your account prevents liquidation. But if losses are severe enough, your entire $10,000 can be wiped out.

Pros:

• More buffer against liquidation per position
• Profits from one position help sustain losing positions
• Better capital efficiency for multiple positions
• Ideal for hedged strategies

Cons:

• Entire account balance at risk
• One catastrophic position can drain everything
• Harder to track risk per trade
• Can mask poor risk management

Isolated Margin Explained

In isolated margin mode, each position has its own dedicated pool of collateral.

How It Works:

• Open Position A: $2,000 isolated margin → $20,000 position (10x)
• Open Position B: $1,000 isolated margin → $10,000 position (10x)
• Account balance: $10,000
• Only $2,000 and $1,000 are at risk, respectively
• $7,000 remains safe regardless of what happens

Pros:

• Maximum loss is clearly defined per trade
• Other positions and funds are protected
• Easier to track risk per trade
• Encourages disciplined risk management

Cons:

• Positions are more easily liquidated (less collateral)
• Less capital-efficient for multiple positions
• Need to manually manage margin per position
• Can't benefit from offsetting positions

When to Use Cross Margin

✅ Hedging — Long BTC, short ETH (opposing positions offset risk) ✅ Low leverage — Using 2-5x where liquidation is far from entry ✅ Experienced traders — Who understand and monitor portfolio risk ✅ Multiple correlated positions — When you need capital efficiency ✅ Arbitrage strategies — Where positions are designed to offset

When to Use Isolated Margin

✅ Beginners — Learning margin trading with limited risk ✅ High-leverage trades — 20x+ where liquidation is close ✅ Experimental strategies — Testing new approaches ✅ Volatile assets — Trading risky altcoins ✅ When you want to sleep at night — Clear, defined risk

Practical Scenarios

Scenario 1: The Night Move

You go long BTC at 10x leverage before bed. Overnight, BTC drops 8%.

Cross margin: Your full account absorbs the loss. You wake up with less money but position intact. Isolated margin: Your position may have been liquidated if margin was tight. But you only lost the assigned margin.

Scenario 2: The Flash Crash

Market has a 15% flash crash that recovers in minutes.

Cross margin: Your larger balance prevents liquidation during the wick. Position survives. Isolated margin: Position likely liquidated during the crash. Loss limited but permanent — no recovery.

Scenario 3: The Bad Trade

You take a long position and the market enters a sustained downtrend.

Cross margin: The longer you hold, the more of your account drains away. Isolated margin: You lose your assigned margin and move on. Remaining funds intact.

Our Recommendation

Start with isolated margin. Switch to cross margin only when you have a clear reason and the experience to manage the added risk.

*This content is educational only, not financial advice.*