Isolated vs Cross Margin: Which Margin Mode Fits Your Trade?

Isolated vs cross margin is a setting that decides how much of your account balance backs a leveraged position. It looks like a small option, but it changes what you can lose on a single trade.

What Margin Is

Margin is the collateral you post to open a leveraged position. Leverage lets you control a position larger than the capital you put up, and the margin is what absorbs losses if the price moves against you. If the margin can no longer cover those losses, the position is liquidated.

How Isolated Margin Works

In isolated margin, you assign a fixed amount of collateral to one position. If that position goes badly, the most you can lose on it is the margin assigned to it, and the rest of your account balance stays untouched. The trade-off is that the position can be liquidated sooner, because it has only its own collateral to draw on.

How Cross Margin Works

In cross margin, your whole available balance backs your open positions. A losing position can draw on the spare balance, which can keep it open through a larger adverse move. The trade-off is that a bad move can use up much more of your account than you intended, since everything in the margin account is exposed.

Side-by-Side

• Risk per position: isolated limits it to the assigned margin, cross can reach the whole balance
• Liquidation distance: isolated positions typically sit closer to liquidation, cross positions further away
• Control: isolated needs you to top up each position, cross shares one pool across them
• Complexity: cross needs more attention when several positions are open

Which Suits Which Situation

Isolated margin tends to suit traders who want to cap the loss on a specific trade or test an idea with a set amount. Cross margin tends to suit traders managing several related positions who want the balance shared between them. Neither is safer in every case, since cross margin trades a smaller chance of liquidation for a larger potential loss.

What to Check Before Trading

Platforms differ in which margin modes they offer and how they calculate liquidation. Bitval offers margin trading and futures markets, with futures fees of 0.03% maker and 0.06% taker, and shows the liquidation price on the futures interface, so check the margin settings on a market before opening a position.

You can create a Bitval account to see the margin settings on each market.

This article is for informational purposes only and does not constitute financial advice. Leverage and margin trading carry substantial risk, including losing more than your initial margin.