Isolated or cross margin

One caps your loss at a number you choose. The other risks the whole balance to stay in the trade longer.

Every leveraged position uses one of two margin modes, and the choice changes what a bad trade can cost you far more than the leverage number does.

Isolated margin

You assign a specific amount of collateral to one position. If price reaches the liquidation level, that amount is lost and the rest of your balance is untouched.

• Advantage: maximum loss is known before you enter.
• Disadvantage: liquidates sooner, because only the assigned margin absorbs the loss.
• Best for: anyone still learning, high-leverage trades, and volatile smaller-cap pairs.

Cross margin

Your entire available balance backs every open position. Losses draw on the whole account, so liquidation is much further away — and hits much harder when it arrives.

• Advantage: survives volatility that would liquidate an isolated position.
• Disadvantage: a single trade can consume the account.
• Best for: hedged positions and experienced traders running several correlated positions deliberately.

A practical rule

Use isolated until you can explain precisely why a specific trade needs cross. If you cannot articulate the reason, the answer is isolated.

And in either mode the discipline is identical: position size comes from stop distance, and liquidation should sit at least twice as far as the stop. Margin mode changes what happens when things go badly wrong; it does not replace the arithmetic that stops them going wrong in the first place.

What actually happens in each mode

Isolated. You allocate a specific sum to a position. That sum is the collateral, and it is fenced off from everything else. As price moves against you, the position consumes that fenced collateral. When it is exhausted, the position is liquidated and the rest of your balance is untouched. You lose exactly what you allocated — no more, no surprises.

Cross. Every position draws on your whole available balance. A position moving against you consumes free equity from the account as a whole, so it can survive far larger adverse moves. The trade-off is that when it finally does liquidate, it takes much more with it — and other positions you hold can be liquidated in the same event, because they shared the collateral.

The scenario that shows the difference

Suppose an account holds $1,000 and you open a position with $200 of margin at 10× leverage.

In isolated mode, the liquidation level sits roughly 10% away from entry. If price falls 12%, the position is liquidated. You lose $200 and the account still holds $800. Painful, defined, survivable.

In cross mode, the same position draws on all $1,000. Price can fall a great deal further before liquidation. If it recovers, cross saved you from a liquidation isolated would have taken — this is the argument for cross, and it is a real one. But if price keeps falling, the loss keeps consuming the account, and the eventual liquidation removes far more than $200.

Where cross margin genuinely belongs

• Hedged books. When you hold offsetting positions, cross lets the profit on one support the loss on the other, which is precisely what shared collateral is designed for.
• Deliberate portfolio margining. Experienced traders running several correlated positions as a single strategy.
• Very low leverage on a large balance, where liquidation is remote and the flexibility is genuinely useful.

Notice what is absent from that list: a single directional bet at high leverage. That is the situation where cross is most tempting and most dangerous, because the extra room encourages holding a losing position longer rather than accepting a defined loss.

Practical rules

1. Default to isolated until you can explain in one sentence why a specific trade requires cross.
2. Never switch to cross to rescue a losing position. This converts a bounded loss into an unbounded one at the worst possible moment, and it is one of the most reliably destructive habits in leveraged trading.
3. Check the mode before every entry. Exchanges remember your last setting, and a mode chosen for one trade silently applies to the next.
4. Size from the stop regardless. Margin mode changes what happens when things go badly wrong; it does not replace the arithmetic that stops them going wrong.

Common questions

Which mode do professionals use?

Both, deliberately. Isolated for individual directional trades where the risk should be capped, cross for hedged books where shared collateral is the point. What they do not do is choose one because it liquidates less often.

Can I switch modes with a position open?

Most venues require the position to be closed first, or restrict switching in ways that vary by platform. Decide before entering rather than assuming you can change your mind.

Does margin mode change my liquidation price?

Yes, substantially. The same position at the same leverage liquidates much further away in cross mode, because more collateral stands behind it. That is exactly why the health of the whole account, not just the position, has to be watched in cross.