Cross vs Isolated Margin: Which is Best for Traders?Cross vs Isolated Margin

cross margin vs isolated margin

Margin trading allows traders to increase their buying power by borrowing funds. This can magnify profits but also increases risk. Two common margin trading approaches are cross margin and isolated margin. Understanding how they differ is key for determining the right strategy.

Cross margin utilizes your entire account balance as collateral for loans. Isolated margin restricts collateral to specific assets. Each approach has distinct risks and benefits traders should weigh carefully.

What is Cross Margin?

With cross margin, all assets in your account can serve as collateral for loans. For example, if you have 1 BTC and 10 ETH in your account, you could borrow up to a certain percentage against the total value of 1 BTC + 10 ETH.

If using a 2x leverage ratio, you could borrow up to 50% of your total account value. So with 1 BTC ($20,000) + 10 ETH ($1,000) = $21,000, you could borrow up to 0.5 * $21,000 = $10,500.

You can then trade with your borrowed funds in addition to your existing crypto assets. If your trades are successful, you repay the loan and keep the profits. However, if trades go south, you can get liquidated.

Understanding Isolated Margin

With isolated margin, you can only borrow against specific coins used as collateral. For instance, you could borrow against your 1 BTC but not against your ETH holdings.

Using 2x leverage, you could borrow up to 1 BTC * 50% = 0.5 BTC. You could then long or short additional BTC positions. The 10 ETH would be protected from liquidation risk in this case.

Isolated margin gives you more flexibility to isolate collateral to particular assets. You can also divide up collateral across multiple isolated margin accounts.

isolated margin
Isolated Margin mode

The Risks of Cross Margin Trading

While cross margin allows borrowing against your entire portfolio, risks are concentrated if prices drop. With the previous example, a BTC price crash could put your entire account at liquidation risk, including the 10 ETH.

With isolated margin, a BTC price drop would only put your borrowed BTC amount at risk rather than your full balance. The protected ETH could even be used to avoid liquidation if accessed quickly enough.

Liquidation tends to happen faster under cross margin as well. Since total account value is considered, smaller adverse price swings can trigger liquidation. With isolated margin, bigger price drops specific to the coin borrowed against are typically required.

Benefits of Isolated Margin Trading

The main advantage isolated margin provides is limiting liquidation risk to specific collateral. This allows better management of risk across account assets.

Isolated margin also lets traders borrow against positions without paying interest. For a long-term BTC hodler, borrowing against BTC as collateral allows putting those coins to use without selling.

Traders can also hedge risks by borrowing one asset to go long on another. For example, you could long ETH with BTC as collateral if you expected ETH to outperform.

Finally, isolated margin may provide larger borrowing power per asset compared to cross margin, depending on exchange rules.

How Liquidations Differ Between Margin Approaches

Liquidation on cross margin can be riskier as falling account value may quickly trigger liquidation across assets. With isolated margin, other account funds are firewalled.

Exchanges also tend to give less time to address margin calls under cross margin. Traders typically have a shorter window to add funds before liquidation.

However, isolated margin gives each position its own liquidation parameters. This provides more flexibility to rescue one position without compromising others.

Finding the Right Margin Trading Strategy

Cross margin lends itself better to beginners with fewer assets and those seeking to leverage an entire portfolio. The convenience of borrowing against total balance may outweigh liquidation risks, expert Kirill Yurovskiy believes.

For traders managing multiple crypto assets, isolated margin allows better risk management. Isolating collateral protects other holdings from excessive liquidation risk during volatile market conditions.

As with all margin trading, risks are multiplied compared to paying full cash upfront. Always carefully assess liquidation prices and your risk appetite before borrowing funds. Margin can provide leverage but also introduces downside hazards if used improperly.


Margin trading opens up possibilities but also hazards for crypto investors. While cross margin offers a simpler approach, isolated margin better contains risks for multi-asset portfolios. There is no definitively superior choice, so weigh the tradeoffs carefully for your specific situation. With the right margin strategy, leverage can magnify your crypto gains.