Isolated vs. Cross Margin: Which Should Your Exchange Offer?
Isolated and cross margin change how — and when — a leveraged position gets liquidated. Here's the difference, with the liquidation behavior sourced, and why a venue should offer both.
When a trader opens a leveraged position, they choose how their collateral backs it: isolated or cross margin. The choice changes the risk profile completely — and any serious derivatives venue offers both.
The core difference
- Isolated margin ring-fences a fixed amount of collateral to a single position. If it's liquidated, the most the trader can lose is that isolated margin — nothing else in the account is touched.
- Cross margin shares the account's entire balance across all open positions as shared collateral. That can prevent a premature liquidation (other funds cushion the position), but a bad move can consume the whole balance.
MetaMask's guide frames it well: isolated gives a predictable, per-trade liquidation price, while cross makes liquidation a portfolio-level event.
How it changes liquidation
This is the practical consequence traders feel:
- Isolated: the liquidation price is fixed and knowable the moment you open the position — it depends only on entry, leverage, and the maintenance margin rate (Bybit: isolated liquidation).
- Cross: the liquidation price moves as your other positions and balance change, because available margin fluctuates.
Below, the calculator shows the isolated case — a fixed liquidation price for a single position:
Simplified isolated-margin estimate. Excludes fees and funding. See the formula and source below.
For the full formula and a worked example, see How Liquidation Price Is Calculated.
When each is used
| Isolated | Cross | |
|---|---|---|
| Risk scope | One position | Whole account |
| Liquidation price | Fixed, predictable | Floats with balance |
| Best for | Sizing a defined bet; high leverage on one idea | Hedged/multi-position books; capital efficiency |
| Worst case | Lose the isolated margin | Lose the account balance |
Why an operator should offer both
Different traders want different risk models — retail users often prefer the guardrails of isolated margin, while sophisticated desks want cross-margin capital efficiency. Supporting both, with a reliable risk and liquidation engine behind them, is part of what makes a venue competitive.
Exact margin and liquidation behavior varies by exchange and account type; figures reflect the cited documentation.
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