When trading on Crypto Futures, you can choose between two types of margin: Isolated and Cross. Each type serves a different purpose and offers different levels of control and risk management for your positions.
Understanding how they work can help you choose the most appropriate strategy for your trades.
What Is Isolated Margin?
Isolated Margin allows you to limit the amount of capital you put at risk on a single trade. Only the margin you allocate to that position (Margin Impact) will be used, and losses are contained within it.
If the market moves against your position, only the funds allocated as margin for that specific position are at risk.
Isolated margin is useful for limiting losses on individual trades, especially when using high leverage.
Example: Let’s say you open a trade with the total volume of 100$ with 100x leverage using isolated margin. A 1% move in the wrong direction would liquidate the position.
What Is Cross Margin?
Cross Margin, on the other hand, uses your entire account balance to maintain open positions. This provides more flexibility and automatic protection from liquidation.
The platform will automatically add available funds from your balance to support a losing position.
Profits from other trades (unrealized PNL) can also be used to help avoid liquidation.
Example: If you have $1,000 in your account and open a $60,000 Bitcoin position using 100x leverage, only a portion of your equity is used as initial margin. If the market moves against you, your remaining account balance is used automatically to keep the trade open, reducing the risk of liquidation—especially if the market turns in your favor later.
What Is the Margin Impact Formula?
The Margin Impact Formula helps traders estimate how much margin will be used when opening a position:
Margin Impact = Order Size / Leverage
Example: If you open a $10,000 position using 100x leverage:
Margin Impact = $10,000 / 100 = $100
This means $100 of your available margin will be used to open and maintain that position. The rest of your account balance remains available for other trades or as a buffer in Cross Margin mode.
Isolated vs Cross Margin: Key Differences
Feature | Isolated Margin | Cross Margin |
Margin Source | Specific to each position | Shared across all positions |
Risk Control | High – loss limited to set margin | Lower – uses full account balance |
Manual Adjustment | Required | Automatic |
Suitable For | Precise risk management | Volatile markets and flexible trading |
Liquidation Protection | Limited | More resilient |
Conclusion
Choosing between Isolated and Cross Margin depends on your trading strategy and risk tolerance. While Isolated Margin provides more control per trade, Cross Margin offers greater protection and peace of mind, especially in the volatile crypto markets. PrimeXBT recommends using Cross Margin for a safer and more flexible trading experience.