Cross Vs Isolated Margin

Cross vs isolated margin represents two distinct ways of managing collateral across multiple positions. In isolated margin, each position has its own separate pool of collateral, meaning a liquidation in one trade does not affect the others.

In cross margin, the entire account balance is used as collateral for all open positions, allowing for more flexibility but increasing the risk that a single bad trade could liquidate the entire account. Choosing between these methods depends on the trader's risk tolerance and strategy.

Cross margin is generally favored by professional traders for capital efficiency, while isolated margin is often preferred by those wanting to ring-fence risk.