Cross and Isolated Margin
With isolated margin, only the collateral assigned to a position can be lost if it is liquidated; with cross margin, all available funds in the account support every open position.
On many leveraged platforms you choose how much of your account backs each trade. Isolated margin puts a wall around one position. Cross margin pools everything. The choice decides how far one bad trade can reach into the rest of your money.
- Category
- Risk Management
- Reading time
- 4 min
- Also called
- Cross margin, Isolated margin, Margin modes
- Updated
The two modes in plain words
Cross margin uses your whole wallet balance as collateral for your positions.1 Positions under the same margin asset share one margin balance.2
Isolated margin sets collateral aside for a single position; if it is liquidated, only that isolated margin is lost.1
Both are forms of Margin trading with Leverage and carry Liquidation risk.
How to choose and manage a margin mode
Decide before opening
On some platforms you cannot switch modes once the position is open.1
Size isolated collateral
With isolated margin, choose the exact amount that backs the trade; only that amount is at risk on liquidation.1
Understand cross exposure
In cross mode, a liquidation loss can reach all margin in that asset, across all cross positions.2
Use offsets knowingly
Cross margin lets gains in one position offset drawdowns in another.3
Adjust isolated margin
With isolated margin, you can top up or withdraw margin on a single position to adjust its leverage.1
Watch margin level
If margin level falls to or below 100%, positions may be reduced or liquidated.2
Worked examples
Example 1 — Isolated loss is capped
−$1,000Account $10,000. You open a trade with $1,000 isolated margin. It is liquidated.
| Lost | $1,000 |
| Rest of account | $9,000 untouched |
With isolated margin only the isolated amount is lost; the rest of the wallet is unaffected.1
Example 2 — Cross loss can spread
Whole balance at riskSame $10,000 account in cross mode. One trade moves sharply against you.
| Collateral backing the trade | Up to the whole $10,000 |
| Worst case | Far more than $1,000 |
Cross margin uses the entire wallet balance as collateral, so the potential loss is the margin balance across all cross positions.2
Example 3 — Cross offset
Net +$100Cross mode: position A is +$600, position B is −$500.
| Net | +$100 |
| Effect | B's drawdown is covered by A's gain |
Cross margin lets gains in one position offset drawdowns in another, which can delay liquidation of B.3
Cross vs isolated
| Aspect | Cross margin | Isolated margin |
|---|---|---|
| Collateral | Whole balance | Amount set for one position |
| Loss if liquidated | Can reach all margin in the asset | Limited to that position's margin |
| Offsets between trades | Yes | No |
| Best for | Hedged or related positions | Single, contained bets |
When traders choose each mode
Containing a speculative bet
Isolated margin caps a high-Leverage trade.
Running hedges
Cross margin lets Hedging legs support each other.
Avoiding early liquidation
Cross margin pools collateral to withstand swings.
Fitting a risk plan
Matching mode to Risk per Trade limits.
Advantages and disadvantages
Advantages
- Isolated mode caps the loss per position.
- Cross mode uses capital more efficiently.
- Cross offsets can delay a Margin Call or liquidation.
- Lets you match risk to strategy.
Disadvantages
- Cross mode can wipe out the whole balance.
- Isolated positions liquidate sooner with thin collateral.
- Rules and names differ by platform.
- Modes may be locked once a position is open.
Going deeper
Read as far as you need. Each level builds on the one before it.
Wall or pool
Beginner
Isolated margin walls off one position's collateral; cross margin pools your whole balance.1
Loss reach
Intermediate
Common mistakes
Leaving cross on by default
Not realising one trade can draw on the entire account.
Thin isolated collateral
Setting so little margin that small moves liquidate.
Assuming you can switch
Expecting to change mode after opening.
Ignoring platform rules
Assuming every exchange calculates margin the same way.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Isolated: loss limited to the assigned collateral.
- Cross: the whole balance backs every position.
- Cross allows offsets but spreads risk.
- Pick the mode before opening.
- Monitor margin level in both modes.
Frequently asked questions
Which is safer?
Can I switch modes?
Is this only for crypto?
Further learning
- Margin
The collateral behind leveraged trades.
- Liquidation
What happens when margin runs out.
- Leverage
Why margin modes matter.
- Position Sizing
Sizing trades to survive.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- Kraken. How to Trade Multi-M Derivatives (opens in a new tab) Checked .
- OKX. How do I trade using Cross and Isolated Modes? (opens in a new tab) Checked .
- Kraken. Cross Margin on Kraken Pro (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.