Isolated vs Cross Margin: Which Mode Caps Your Loss and Which One Liquidates First

Isolated margin is a margin mode where the collateral behind a position is fixed at the amount you assign to it, so a liquidation can only take that amount. Cross margin is a margin mode where every open position shares the full available balance in your account, so a losing position keeps drawing on that balance until the whole account reaches its maintenance floor. Same trade, same leverage, two different liquidation prices and two very different worst cases.

What is the difference between isolated and cross margin?

Margin is the collateral you post to open and hold a leveraged position.^[1] On a perpetual futures venue you put up a slice of the position's notional value as initial margin and the venue extends the rest of the exposure. The margin mode decides where that collateral lives and what else the position can reach for when it's losing.

In isolated mode the answer is nothing. You assign $6,000 to a position and that $6,000 is the entire pool the trade can burn through. The rest of your wallet sits untouched. If the trade goes badly enough the venue closes it, the $6,000 is gone, and the remaining balance is still there in the morning.

In cross mode the position's collateral is your whole available balance, shared with every other cross position on the account. Unrealized losses on one position get absorbed by free balance and by unrealized profits on the others. That's a bigger cushion, so the same trade can survive a deeper move. But the cushion is your account. When cross runs out of room there's nothing left to protect.

That's the whole difference. Everything else in this guide follows from it.

How does each mode calculate the liquidation price?

Both modes liquidate when a position's collateral falls to the maintenance margin, the minimum equity the venue requires to keep it open.^[2] On crypto perpetual venues the maintenance rate for the smallest position tiers is often around 0.5% of notional. It rises in steps as position size grows, and the exact schedule varies by venue, by contract and by tier, so treat 0.5% as a working figure rather than a promise.

For an isolated position the math is contained. The liquidation price sits where the unrealized loss equals the posted margin minus the maintenance requirement. Higher leverage means less margin behind each dollar of notional, which puts that price closer to entry. Add margin to the position and it moves away again.

For a cross position the same equation runs against the whole account. The liquidation price sits where the combined unrealized loss across all cross positions equals the available balance minus the combined maintenance requirement. Free balance you never meant to risk on this trade is in that equation. So is unrealized profit on your other positions, which is why a hedged long and short in cross mode can hold each other up.

Real venues add detail on top. Liquidation is triggered on mark price rather than last price, closing fees are reserved in advance, and the maintenance rate is usually applied to the position's current value rather than its entry value. The liquidation calculator has an isolated and cross toggle and works the numbers for any entry, leverage and balance.

A worked liquidation example under both modes

Take one trade and run it twice.

You go long 1 BTC of notional at $60,000 with 10x leverage. Initial margin is $6,000. Maintenance margin at 0.5% of notional is $300. Your wallet holds $20,000 in total and nothing else is open.

Isolated mode. The position can only draw on the $6,000 you assigned. Liquidation arrives when the unrealized loss reaches $6,000 minus $300, or $5,700. On a 1 BTC position that's a $5,700 move, so the liquidation price is roughly $54,300, about 9.5% below entry. If it hits, the venue closes the position and the $6,000 is gone. The other $14,000 in the wallet never entered the fight.

Cross mode. The same position can draw on the full $20,000. Liquidation arrives when the loss reaches $20,000 minus $300, or $19,700. That's a liquidation price of roughly $40,300, about 33% below entry. The position survives a far deeper drawdown. But if price does get there, the loss is $19,700 rather than $5,700, and the wallet is left with a few hundred dollars.

Same trade, same leverage, same entry. Isolated gives up early and keeps most of the account. Cross fights to the last dollar and then hands over the last dollar. Neither outcome is a surprise once you know which mode you're in. The surprise happens to people who didn't check.

These figures ignore fees and apply the maintenance rate to entry notional to keep the arithmetic readable. A live venue will land within a few hundred dollars of them. The leverage calculator shows what each price move does to the position on the way down, and the venue's own liquidation estimate is the number to check before the order goes in.

Which one gets liquidated first?

On an identical position, isolated liquidates first. That's the point of it. The margin you assigned is a hard stop on the loss, and the price where the venue enforces that stop is closer to entry than the cross equivalent because less collateral sits behind the trade.

Cross liquidates later on any single position, but when it goes, it can take every cross position on the account in the same event. The venue doesn't close just the losing trade. It closes whatever it needs to bring the account back above maintenance, and on most venues that means everything in cross mode. One bad position is a threat to the good ones sitting next to it.

One second-order effect matters here. In cross mode, unrealized profit on one position counts as collateral for another. A long that's deep in profit can keep a losing short alive for a long time. That's a feature if the two are a deliberate hedge and a liability if the profit is something you meant to bank.

Adding margin, and the trap that cross mode hides

Isolated positions let you add margin by hand. Push more collateral in and the liquidation price moves away from entry. It's a deliberate act, and every time you do it you're choosing to put more of the account behind a trade that's going against you.

Cross mode does the same thing automatically and silently. Every tick against the position pulls more of the free balance into the fight without asking. Functionally it's the same decision, which is why experienced traders describe cross mode as averaging down on collateral. The mode isn't wrong. It just makes a choice on your behalf that you might not make if you had to click a button each time.

None of this replaces sizing. A position sized so that a normal move liquidates it is badly sized in either mode. The position size calculator works from the account, the risk you'll accept and the stop, and the mode question only comes after that number exists. Position sizing covers why the size matters more than the entry.

Which mode for whom?

Testing a thesis on one position. Isolated. You decide the most the idea can cost and the venue enforces it. If you're new to perpetuals, this is the mode to learn on, because the worst case is visible before you enter.

Running a hedge or a spread. Cross. A long on one contract and a short on another are supposed to offset, and cross mode lets the profit on one leg support the loss on the other. In isolated mode the losing leg can be liquidated while the winning leg sits there fully collateralized.

High leverage, small margin, short holding period. Isolated, with a small assigned margin. The trade either works quickly or costs a known, small amount. Cross mode at 50x turns a scalp into an account-level event.

A basket of positions on one account. It depends on whether they're related. Uncorrelated one-off trades belong in isolated so one blow-up doesn't cascade. A deliberately balanced book, where the positions are meant to move against each other, is what cross was designed for.

Any position you can't watch. Isolated. Cross mode assumes you'll notice the free balance draining. Overnight, over a weekend or during a liquidation cascade, that assumption fails.

How margin mode shows up in the wider data

Margin mode is invisible in the aggregate data, but its effects aren't. When funding rates run hot for days, cross positions with deep balances can absorb the drain longer than isolated ones, which delays the reset. When open interest builds at high leverage, the isolated positions in that stack have liquidation prices bunched close to entry, and they're the first to go when price moves. Liquidations as a signal covers how those cascades read on a chart. What looks like a single market event is usually a lot of individual margin-mode decisions being enforced at once.