Isolated and cross margin
Lesson 7 of 16 in the course “Futures from Zero”. Free, with animations and a quiz.
Separate boxes or one big one
Exchanges have two margin modes. Isolated: each trade has its own box with a deposit. If the trade burns, only its box burns. Cross: all trades take the deposit from one big box, which is your whole free balance. In cross, liquidation comes later, but when it comes, it takes much more.
The price of one mistake
Nika has $1,000 in her account. She opened a trade with $100 margin, and the price moved sharply against her. In isolated mode, $100 burns and $900 stays. In cross, the exchange keeps the trade open, using all the free balance to cover the loss until it’s almost gone. If the price doesn’t turn, only crumbs are left. One mistake and it’s over.
What to pick at the start
While learning, pick isolated margin: that way one mistake never eats the whole account. Watch out: many exchanges default to cross and ×20 leverage. In the practice terminal at the end of the course you’ll see the same thing and switch the mode first. Cross is a tool for experienced traders who hold several linked positions and track total risk.
Check yourself
- Account $500, a $50-margin isolated trade gets liquidated. How much is left?
Correct answer: About $450. In isolated mode only this trade’s deposit, $50, burns. The rest is safe. - Why is isolated margin better for beginners?
Correct answer: One mistake won’t eat the whole account. Isolated margin caps the loss at the trade’s deposit. Liquidation still exists, it just doesn’t drag the whole balance.