# Cross Margin Accounts ⎊ Area ⎊ Resource 2

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## What is the Account of Cross Margin Accounts?

Cross margin accounts allow traders to consolidate their collateral and margin across all open positions under a single account balance. This pooling mechanism offers increased capital efficiency compared to isolated margin systems, as gains in one position can be used to offset losses in another. The account structure provides greater flexibility in managing overall risk and leverage.

## What is the Collateral of Cross Margin Accounts?

The collateral in a cross margin account supports every position simultaneously, meaning a single deposit of funds serves as margin for all trades. While this reduces the total capital required, it also increases the interconnectedness of risks within the portfolio. A significant loss on any individual position can potentially deplete the entire collateral pool.

## What is the Liquidation of Cross Margin Accounts?

The liquidation trigger for a cross margin account is based on the aggregate health of the entire portfolio. If the combined value of all positions falls below a specific threshold relative to the collateral, the system will initiate liquidation of a portion or all positions to maintain solvency. This design choice prevents isolated losses but exposes the entire account to systemic risk from a single bad trade.


---

## [Cross-Margin Risk](https://term.greeks.live/definition/cross-margin-risk-2/)

## [Volatility Exposure Management](https://term.greeks.live/term/volatility-exposure-management/)

## [Quantitative Trading Systems](https://term.greeks.live/term/quantitative-trading-systems/)

## [Instrument Types](https://term.greeks.live/term/instrument-types/)

## [Financial Derivative Strategies](https://term.greeks.live/term/financial-derivative-strategies/)

## [Correlation Trading Strategies](https://term.greeks.live/term/correlation-trading-strategies/)

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**Original URL:** https://term.greeks.live/area/cross-margin-accounts/resource/2/