Isolated vs cross margin: what each one puts at risk
Isolated margin walls off one trade. Cross margin lets every trade lean on your whole balance. Pick the wrong one and a single trade can reach money you never meant to risk.
The short answer
Isolated and cross margin are settings you'll find on crypto futures and some other leveraged platforms.
Isolated margin sets aside a fixed amount for one position. If that trade goes badly, it can only lose that amount. The rest of your balance is untouched.
Cross margin uses your whole available balance to support all your open positions. A losing trade can keep drawing on your balance before the exchange closes it out (liquidates it), and that can cost far more.
Side by side
| Isolated margin | Cross margin | |
|---|---|---|
| Money at risk per trade | Only what you assign to it | Your whole available balance |
| Liquidation point | Closer, since less money backs the trade | Further away, since more money backs it |
| Size of a liquidation | Limited to that trade's margin | Can wipe most of the account |
| Positions affect each other | No | Yes, a gain in one can support a loss in another |
| Control | Clear, one bucket per trade | Harder to see what's really at risk |
| Common fit | Beginners, single trades | Experienced traders hedging several positions |
A worked example
You have $1,000 in your account. You open a bitcoin futures trade using $100 of margin at 10x leverage, so the position is worth $1,000.
Isolated, $100 assigned. If price falls about 10% against you (a bit less, after fees), the $100 is gone and the position is liquidated. Your other $900 is safe.
Cross, whole balance. The same trade can lean on your full $1,000. Price can fall much further before liquidation. But if it does, you could lose most of the $1,000, not $100.
These are rough math examples, not promises. Real liquidation prices depend on the exchange's fees and maintenance rules. The crypto liquidation calculator estimates them.
Isolated margin: strengths and limits
The good parts:
- Known maximum loss per position: the margin you assigned.
- Simple to read. Each trade has its own bucket.
- Protects the rest of your balance from one bad trade.
The limits:
- Liquidates sooner because less money supports the trade.
- Tempting to add margin to a losing trade to "save" it. That just raises your risk.
Cross margin: strengths and limits
The good parts:
- Fewer early liquidations because the whole balance supports the trade.
- Useful for hedges. A gain on one position can offset a loss on another.
The limits:
- One trade can drain the account. The bigger buffer is your own money.
- Hard to see real risk. Your loss isn't capped at a number you chose.
- Encourages holding losers, since the liquidation price feels far away.
Your stop should come long before liquidation. Liquidation is the exchange closing you out, often with extra fees. Your real exit belongs on the chart, past the last place price turned around. Size the trade so hitting that stop costs about 1% of your account. The position size calculator does the math.
Which fits you?
- You're new to leverage. Isolated margin fits better. Each trade's worst case is visible and limited.
- You hold several positions that offset each other. Cross margin can make sense, if you understand how they interact.
- You want to avoid liquidation completely. Use low or no leverage, and a real stop. See spot vs futures crypto.
A note for US traders: many offshore exchanges that offer high-leverage crypto futures don't serve US customers. Regulated US venues usually offer far less leverage to retail traders.
Common mistakes
- Leaving cross margin on by default. Check the setting before every trade.
- Using liquidation as your stop. It's the worst-case exit, not a plan.
- Adding margin to a losing isolated trade. That turns a small, capped loss into a bigger one.
- Maxing leverage. Higher leverage moves liquidation closer. See leverage and margin explained.
Questions
Is isolated or cross margin better for beginners?
Isolated margin is usually easier for beginners because each trade can only lose the margin assigned to it. Cross margin can put the whole balance at risk.
What happens when you get liquidated on isolated margin?
The exchange closes that position, and you lose the margin assigned to it, often plus fees. Your other balance isn't used.
Why does cross margin liquidate later?
Because your whole available balance backs the position. Price has to move further before the losses use up that bigger pool, which also means a bigger loss when it happens.
Can I switch between isolated and cross margin?
On many exchanges, yes, usually per trading pair. Some only allow switching when you have no open position in that pair.
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