Isolated vs Cross Margin: What Is the Difference in Crypto?

Isolated margin assigns a fixed amount of collateral to a single position, while cross margin uses your whole available account balance as shared collateral for every open position. With isolated margin, a liquidation can only take the margin assigned to that position. With cross margin, the position is harder to liquidate, but a large loss can consume your entire balance.

Key takeaways

• Isolated margin: each position has its own collateral; the maximum loss is that collateral.
• Cross margin: all positions share the account balance; losses on one can drain funds backing another.
• Cross margin pushes the liquidation price further away for a single position.
• Cross margin lets gains on one leg offset losses on another in the same account.
• Cross margin never spans two different exchanges.
• The right choice depends on whether positions are independent bets or parts of one hedge.

How isolated margin works

When you open a position with isolated margin, you choose how much collateral to assign to it. That amount, together with the position size, sets your leverage and your liquidation price.

If the trade moves against you and the position's equity falls to the maintenance margin, only that position is liquidated. The rest of your balance is untouched. Most exchanges let you add margin to an isolated position to move the liquidation price further away.

How cross margin works

With cross margin, there is no fixed collateral per position. Your available balance acts as one pool backing everything. Unrealized profits on one position add to the pool; unrealized losses draw from it.

Liquidation happens when the account's total equity falls below the combined maintenance margin of all open positions. When it does, the exchange may close several positions, not just the losing one.

Some exchanges also offer portfolio margin or unified accounts, which extend cross margin across spot, futures and options and calculate requirements from the net risk of the whole portfolio. The rules differ by venue, so read them before relying on them.

Worked example 1: one position

Assume an account with $10,000 and a BTC long of $10,000 notional. For simplicity, assume a fixed maintenance margin of $50 and ignore fees (illustrative figures).

Isolated, with $1,000 of margin (10x):

• Liquidation when $1,000 − loss = $50, so loss = $950
• $950 ÷ $10,000 = a 9.5% price drop
• Maximum loss: $1,000. The other $9,000 is safe.

Cross, with the full $10,000 available:

• Liquidation when $10,000 − loss = $50, so loss = $9,950
• $9,950 ÷ $10,000 = a 99.5% price drop
• Effective leverage is 1x, but the maximum loss is the whole account.

The leverage number you pick on a cross position often does not change how much of the account is exposed. What matters is the position size relative to the total balance.

Worked example 2: a hedged pair

Now assume $2,000 of collateral, a BTC long of $10,000 and an ETH short of $10,000. The market falls 10% and both coins move together.

• BTC long: −$1,000
• ETH short: +$1,000

Isolated, with $1,000 on each position:

• The BTC long loses $1,000, more than the $950 it can absorb, and is liquidated.
• The ETH short's $1,000 profit sits in its own margin and cannot help.
• You are left with an unhedged short and have paid a liquidation penalty on the long.

Cross, with $2,000 shared:

• Net PnL: −$1,000 + $1,000 = $0
• Account equity stays about $2,000. No liquidation, and the hedge stays intact.

This is why hedged traders on a single exchange often prefer cross margin or a unified account.

Isolated vs cross margin compared

	Isolated margin	Cross margin
Collateral	Fixed amount per position	Whole available balance, shared
Maximum loss per position	The assigned margin	Potentially the entire account
Liquidation distance	Set by assigned margin	Further away, using all free balance
Offsetting positions	No, each stands alone	Yes, gains support losses
Management effort	Top up each position manually	Monitor total account health
Suits	Independent, speculative bets	Hedges, spreads, multi-leg strategies

Margin mode in arbitrage

Many arbitrage strategies have two legs, and the margin mode affects how safe the hedge is.

• Same exchange: a cash-and-carry trade that holds spot and shorts the perpetual on one exchange can benefit from cross or unified margin. On venues that count spot holdings as collateral, a rally that hurts the short also raises the value of the spot backing it.
• Two exchanges: a funding rate arbitrage trade that is long on one exchange and short on another has no shared collateral at all. Each leg behaves like an isolated position, whatever mode you choose on each venue. A sharp move can liquidate one leg while the other shows an equal profit on a different exchange.

For cross-exchange hedges, the practical defense is low leverage on each leg, spare collateral on both venues and a plan to rebalance margin between them.

Common mistakes

• Opening a risky trade in cross mode by default. Many platforms default to cross margin, so a single bad trade can drain the whole balance.
• Treating leverage as the risk measure in cross mode. Exposure depends on total position size versus total equity, not the leverage slider.
• Using isolated margin on each leg of a same-exchange hedge. One leg can be liquidated even though the combined position is flat.
• Assuming cross margin protects a cross-exchange hedge. It does not; collateral never moves between exchanges on its own.
• Forgetting that several positions can be closed together. In cross mode, one liquidation event can hit every open position.

How ArbTide helps

Use the liquidation price calculator to see how far each leg can move before liquidation, and the margin calculator to size collateral. The funding rate arbitrage strategy page covers how to manage margin across two exchanges.