Cross margin

A margin mode in which all cross-margined positions in an account share one pool of collateral, so profit on one position can support another and a loss on one can draw down the collateral backing the rest.

Definition

Under cross margin, the exchange does not ring-fence collateral per trade. Your account balance backs every cross-margined position at once, and the liquidation decision is made on the account as a whole rather than position by position.

What that buys you

Capital efficiency and staying power. Unrealised profit on one position counts as available margin for another, so a hedged or diversified book needs less collateral than the same positions funded separately. A position that moves against you is supported by everything else in the account, so it survives moves that would have closed it in isolation.

What it costs you

Correlation of failure. The same shared pool that keeps one position alive means a bad enough loss anywhere drains the buffer everywhere. Positions you were not worried about can be liquidated because of a position you were.

This matters most when the trades are less independent than they look. Two different tokens that both fall in a market-wide move are, for margin purposes, close to the same trade.

Cross versus isolated

Isolated margin does the opposite: it caps the loss on a position at the collateral assigned to it, and accepts that this collateral cannot be topped up automatically from elsewhere.

Neither mode is safer in general. Isolated bounds the damage of one bad trade; cross bounds the chance of being stopped out by noise. The choice is about which failure you are trying to avoid.

Where you will run into it

As a per-position or per-account switch on most perpetual DEXs, sometimes combined with sub-accounts, which let you run separate cross-margined pools that cannot reach each other.