What is a cross margin position and how does it work?
A cross margin position uses your whole account balance as shared collateral for every open trade. A loss on one position can affect the others.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
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Margin trading means you borrow from an exchange to open a larger position than your deposit alone would allow. You post collateral to cover possible losses, and cross margin does not tie that collateral to a single trade.
What is a cross margin position?
A cross margin position uses your whole account balance as collateral for every open trade. The exchange calculates equity across all positions and supports each one from that pool. If one position loses money, the exchange can draw on the same pool to keep other positions open.
How cross margin works
In isolated margin, you assign collateral to one position, and only that amount is at risk. In cross margin, all positions share the account's margin. A loss on one position reduces the equity available to every other position. A gain on another position can add to that pool. The exchange checks total account equity against the maintenance margin requirement.
Why traders use cross margin
Cross margin can improve capital efficiency. Gains in one position can offset losses in another, so you may need less extra collateral to keep positions open.
- Offset gains and losses across positions.
- Keep more equity available for new trades.
- Avoid shifting margin between positions.
- Manage several trades as one pool.
Risks and liquidation limits
Liquidation happens when total account equity falls below the maintenance margin requirement. The exchange then closes positions to protect itself from further losses. Because cross margin shares collateral, a single bad trade can put your entire account at risk and drain the equity that supports all the others.
Frequently asked questions
Usually no, if the exchange uses automatic liquidation. In a sharp price gap, liquidation may not fill at the expected price, and you could owe the exchange.
The exchange treats the whole account as one pool. A liquidation can close or reduce other positions to restore the maintenance margin.
Yes. Many crypto exchanges offer cross margin as a mode for futures and perpetual contracts. It is also used for margin trading of spot pairs.
It can move your liquidation price further away because the whole account balance supports the position. But the price depends on your total equity and all open positions.
