Cross Margin vs Isolated Margin: Complete Guide
In crypto futures trading, your choice of margin mode is the foundation of your risk management. Understanding the differences between cross margin and isolated margin is critical for protecting your capital and making informed trading decisions.
What Is Margin in Crypto Futures?
Margin is the collateral you deposit to open a leveraged position. When using leverage, you only cover a fraction of your total position size. For example, with 10x leverage, a $10,000 position requires only $1,000 in margin. Your margin mode determines how this collateral is managed and how liquidation behaves.
What Is Isolated Margin?
In isolated margin mode, a specific amount of margin is allocated to each position. The position is protected and liquidated based only on its assigned margin. Other funds in your account remain unaffected.
How It Works
- •You assign a fixed amount of margin to each position
- •Liquidation price is calculated based only on the assigned margin
- •If a position is liquidated, only that position's margin is lost
- •Your other positions and remaining balance stay safe
Advantages
- ✓Risk is limited per position
- ✓Maximum loss is known in advance
- ✓Easy to manage multiple independent positions
- ✓Safer for beginners
Disadvantages
- ✗Shorter distance to liquidation
- ✗More vulnerable to sudden wicks
- ✗May require manual margin additions
What Is Cross Margin?
In cross margin mode, your entire available account balance is used as collateral for all open positions. All positions share the same margin pool.
How It Works
- •Your entire available balance serves as collateral
- •Liquidation price is calculated based on total account balance
- •Profit from one position can support another position's margin
- •If liquidation occurs, your entire balance is at risk
Advantages
- ✓Much wider distance to liquidation
- ✓Lower risk of wick liquidations
- ✓Margin sharing between hedged positions
- ✓Easier margin management
Disadvantages
- ✗A single bad trade can wipe your entire balance
- ✗Risk control is more difficult
- ✗Total exposure can be unclear
Side-by-Side Comparison
| Feature | Isolated Margin | Cross Margin |
|---|---|---|
| Collateral | Per-position | Entire balance |
| Liquidation Risk | That position only | Entire account |
| Liquidation Distance | Shorter | Much wider |
| Maximum Loss | Assigned margin | Entire balance |
| Hedge Support | Independent | P&L offsets |
| Difficulty Level | Beginner | Advanced |
When to Use Which Margin Mode
Use Isolated Margin When:
- →Scalping or day trading with high leverage
- →Testing a new strategy or trading a new coin
- →Taking speculative one-directional positions
- →You have low risk tolerance
- →You want to know your max loss per trade upfront
Use Cross Margin When:
- →Holding low-leverage long-term positions
- →Running hedge strategies (long + short simultaneously)
- →You want protection against sudden wicks
- →You have strong stop loss discipline
- →Managing a portfolio-style margin account
Liquidation Behavior Compared
The difference in liquidation behavior between the two margin modes is the most critical aspect of risk management.
Example Scenario
Account Balance: $10,000 | Entry: $50,000 BTC | Leverage: 10x | Position: $10,000 ($1,000 margin)
With Isolated Margin:
- Only $1,000 margin is at risk
- Liquidation price: ~$45,250 (≈9.5% drop)
- If liquidated, you lose $1,000
- Remaining balance: $9,000 stays safe
With Cross Margin:
- Entire $10,000 balance is used as collateral
- Liquidation price: much further away (~$5,250)
- Getting liquidated is practically impossible
- BUT if liquidated, you lose the full $10,000
Real-World Examples
Example 1: The Scalper (Isolated Preferred)
Alex scalps BTC with 25x leverage. On a $5,000 account, he allocates $200 margin per trade (isolated). If a trade fails, he loses $200 max. He can open and close 10 trades a day knowing the risk on each one. Even if 3 trades get liquidated, he only loses $600.
Example 2: The Swing Trader (Cross Preferred)
Sarah swing trades ETH with 3x leverage. She uses cross margin on her $20,000 account. The low leverage means her liquidation price is extremely far away. She can hold through weekly volatility without worry. However, she always uses stop losses because without them, cross margin puts her entire balance at risk.
Example 3: The Hedger (Cross Preferred)
Mike runs a BTC long and ETH short hedge. Using cross margin, the two positions share margin. Profit on one offsets losses on the other, reducing total margin requirements and giving both positions more breathing room.
Pro Tip
Regardless of which margin mode you use, always set a stop loss. In isolated margin, a stop loss ensures you exit before liquidation. In cross margin, trading without a stop loss risks your entire balance. Use our liquidation calculator to plan safe entry points.
Calculate Your Liquidation Price
Whether you use cross or isolated margin, knowing your liquidation price before entering a trade is essential. Use our free calculator to plan your position:
Open Liquidation Calculator