Cross Margin and Isolated Margin are key concepts in margin trading, defining how funds are allocated to manage trades and risks. They determine how open positions interact with the trading account’s balance, affecting potential profits and losses.
Cross Margin
Cross Margin pools all funds in a trading account, allowing open positions to share the same margin. Losses in one position can be offset by profits or available funds from other positions, reducing the likelihood of liquidation for individual trades. This offers flexibility but carries a higher risk: a significant loss in one position could deplete the shared margin, potentially liquidating all positions.
Isolated Margin
Isolated Margin assigns separate funds to each position, independent of others. Losses are limited to the allocated margin, protecting other positions and the account’s balance. This reduces flexibility, as unused margin can’t support other positions, but it lowers risk by containing losses to individual positions.
Cross Margin and Isolated Margin on CEX.IO Margin Trading
CEX.IO Margin Trading supports both Cross Margin and Isolated Margin modes.
Good to know: Up to 5 sub-accounts can be created. In Cross Margin mode, positions within a sub-account share funds, and the total margin level of all positions must stay above liquidation thresholds. In Isolated Margin mode, each position’s funds are separate, so a loss only affects specific position. Unrealized profits in Cross Margin mode contribute to the account’s margin level, unlike Isolated Margin, where unrealized profits and losses affect only the margin level of a specific position.
It’s also crucial to understand that the margin level for Isolated Margin is calculated separately for each margin position, while the margin level for Cross Margin is calculated cumulatively for all open margin positions.