Beginner Guide to Contracts Understanding Isolated Margin vs Cross Margin Differences

Master Cross vs. Isolated Margin in 3 Minutes: Track Your Funds!

Essential for crypto beginners! We'll clarify the key differences between these critical margin modes in straightforward language. This guide could help you avoid substantial losses.

1. Isolated Margin

Isolated Margin caters to risk-takers — your margin functions like chips on a table: losses are limited to that specific position.
You can simultaneously open long and short trades, with each position operating independently.

• Main Benefit: Liquidation affects only the margin for that position, safeguarding your other funds.
• Best For: Short-term traders with precise strategies, or experts hedging long and short positions concurrently.

2. Cross Margin: High-Risk, High-Reward

In Cross Margin mode, your entire account balance serves as collateral, amplifying both gains and losses.

All positions are aggregated, providing enhanced risk tolerance.

• Main Benefit: Reduced likelihood of liquidation from minor price fluctuations, ideal for managing larger capital.
• Best For: Long-term investors or professionals executing hedging strategies.

A Real-World Case Study

Xiao Ming and Xiao Hong each open a $2,000 long position with 10x leverage:

• Xiao Ming uses Isolated Margin: liquidated at $8,000 — loses $1,000 but retains $1,000.
• Xiao Hong uses Cross Margin: liquidated at $7,000 — survives at $8,000, but a further drop wipes out the entire account.

The key takeaway—
Cross Margin resembles betting all your chips on one table: massive wins or total losses.
Isolated Margin is like spreading bets across tables — lose one, continue with others.

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