What Is Cross Margin?

Cross margin feels safer. Your liquidation price looks miles away. That feeling is the trap.

Cross margin means all your open positions share one pool of collateral: everything in the account. A losing position can keep borrowing from the rest of your balance to stay open, and every position affects the others.

If you want each loss boxed in before you click, this explains why we skip cross margin. If you've ever flipped to cross to "save" a trade from liquidation... this page is about you.

How is cross margin different from isolated margin?

In isolated mode, each position has its own margin, and liquidation happens when that margin is used up. In cross mode there's no separate pot. Every unit of free balance in the account backs every open position. Liquidation only happens when combined unrealized losses eat through nearly the whole account balance, after maintenance requirements.

First, liquidation prices sit further from entry than they would on the same trade in isolated mode, because more collateral stands behind the position. Second, the positions are linked. A loss on one shrinks the cushion behind all the others, and a profit on one props up the rest. In crypto, most coins fall together in a sharp move, so one market-wide drop can hit every position at once.

One account. One fuse.

What does cross margin look like in dollars?

Illustrative numbers only. A trader has a $10,000 account and, on cross margin with no stops, opens a long BTC position worth $25,000 and a long SOL position worth $15,000. Total exposure: $40,000, or 4 times the account.

• A market-wide flush takes both down 15%. Unrealized loss: $6,000. Neither position is liquidated, because the whole account is backing them, so the trader feels there's still room.
• If prices fall roughly another 10%, combined losses approach $10,000 and both positions are liquidated together, taking essentially the entire account.

Our way: each trade has a stop at its invalidation and is sized so that hitting the stop costs $100, 1% of the account. Each runs in isolated mode with a modest amount of margin. The flush hits both stops: $200 gone in total, plus costs, and $9,800 left to trade with tomorrow.

Same market. Same two ideas. One trader is done. The other is annoyed... and still in the game.

Why don't we teach new traders to use cross margin?

Because the main benefit of cross margin, a distant liquidation price, only helps traders who aren't using stops. And the main cost lands on exactly those traders. Funny how that works, right?

Chad's co-founder Niko Mercuris keeps his guidance short: "if you don't know what that is, do not use it." His reason: "cross allows you to trade with everything you have." Chad's own practice is the same. He runs every position in isolated margin.

Some experienced traders use cross on purpose, for example to hold offsetting positions. That's a specialist tool. Inside the Decision Protocol, each trade gets its own invalidation, its own size and its own line in total exposure. Isolated margin matches that structure. Cross margin blurs it.

What's the cross margin move that wipes accounts?

Switching to cross margin, or leaving it on, to keep a losing position from being liquidated. It works for a minute: the liquidation price moves away. What actually happened is the rest of your account just got drafted to defend an idea the market is ALREADY rejecting. When the move continues, it takes more than the original trade ever risked.

The second mistake is forgetting that open positions on cross are linked. Several longs on different coins aren't several separate risks in a sharp market. They behave like one big position. Count them together before you add another.

What cross margin setting should you check right now?

Look at the margin mode your platform is set to. If it says cross and you can't explain why, make isolated your default before your next trade.

Keep going: crypto leverage trading, crypto risk management, crypto leverage liquidation explained, liquidation price and margin.

Sources: the CFTC's futures glossary defines margin and maintenance margin, and Investor.gov explains that on a margin call the firm can sell your holdings without notice to cover the shortfall.