Cross Margin vs Isolated Margin: What's the Difference?
When trading with leverage on a crypto exchange, you have to choose a margin mode. It determines how much money you can lose in a liquidation. Here's how both modes work.
What it is
| Isolated | Cross | |
|---|---|---|
| Collateral | Only the funds for this trade | Your entire account balance |
| In a liquidation you lose | The trade's collateral | Possibly your entire balance |
| Who it's for | Beginners | Experienced traders using hedges |
Example
You have 1,000 USDT in your account. You open a long with 100 USDT of collateral and 10x leverage. In isolated mode, in a liquidation you lose 100 USDT and the rest is safe. In cross mode, the exchange will draw funds from your whole account, so the trade stays open longer, but the loss can reach 1,000 USDT.
Which to choose
For beginners: isolated margin, low leverage and a mandatory stop-loss. How leverage works is covered in leverage explained simply, and the liquidation calculator will work out your liquidation price.
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- Isolated margin limits your loss to the trade's collateral.
- Cross margin puts your whole balance at risk.
- A stop-loss is mandatory in either mode.
Frequently asked questions
Can I change the mode on an open trade?
Usually not: the mode is chosen before opening. Check your exchange's rules.
Why do experienced traders use cross margin?
When you have several positions that hedge each other, shared collateral is more convenient. Without experience, it's simply more risk.
Does isolated margin protect me from losses?
No, it only limits the loss to the trade's collateral. You can still lose all of it — that's why you need a stop-loss.
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