Cross-Margin Trading

Cross-margin trading is a risk management system where the total balance of a trading account is used as collateral for all open positions. Unlike isolated margin, where collateral is assigned to a specific trade, cross-margin allows profits from one position to offset losses from another.

This provides greater flexibility and prevents premature liquidations during temporary price volatility. However, it also means that a single losing trade can potentially drain the entire account balance if not managed carefully.

This system is common in large crypto derivative exchanges as it improves capital efficiency for professional traders. It requires a disciplined approach to risk, as the interconnectedness of positions means the account's health is determined by the net equity.

Traders must monitor their overall margin ratio closely to ensure they have enough buffer to survive market turbulence. It is a powerful tool for those who understand how to balance their portfolio across multiple instruments.