Cross or isolated margin: differences and which to use

• Isolated. Each position has its own margin and can only lose that. If you open a trade with $100, the most you lose is that $100: when it reaches a 100% loss, the exchange liquidates it and the rest of your account is untouched.
• Cross. The position draws on the balance of your whole futures account. It can reach −200%, −500% or more on its margin, until there’s nothing left. As CryptoBruj puts it: you open a $50 trade with $500 in your account, and you can lose the whole $500.

You have 1,000 USDT in your futures account and open a BTC long at 60,000 with 100 USDT of margin at 10x: a 1,000 USDT position. The maintenance margin is 0.5%.

• In isolated margin, the position is liquidated if BTC drops to about 54,270, 9.5% lower. You lose the 100 USDT and have 900 left in your account.
• In cross margin, that same drop doesn’t liquidate you: the loss comes out of your balance and the position stays open. If BTC keeps falling, it eats into the 1,000 USDT. With a position the same size as your balance, only the stop loss or a price reversal can save you.

The figures are approximate: each exchange calculates liquidation with its own maintenance margin table and the mark price.

It’s the core idea of the video:

If you put the stop loss at −1% on a cross margin trade, what difference is there from isolated? None.

The stop loss sets the limit that the margin sets in isolated mode. That’s why CryptoBruj says cross margin isn’t always riskier: it depends on how you use it. What’s risky is cross margin without a stop loss. If you have self-control and always set the stop, cross margin gives you more freedom. If you don’t set the stop or you’re just starting out, isolated is the better choice.

Where to put that stop is covered in the guide to stop loss and take profit.

In his futures course from scratch, CryptoBruj gives it two uses:

• Highly leveraged trades, where isolated margin would liquidate you on a small price move.
• Very long-term trades, where you accept that the position may go past a 100% loss before it turns around.

Both are for experienced traders. And in both, the stop loss is still what decides how much you can lose.

The futures calculator works in isolated margin: enter your entry, the leverage and the margin, and you’ll see at what price the position would be liquidated. Try going from 10x to 50x to see how close liquidation gets.

• Using cross margin “so you don’t get liquidated” and not setting a stop loss. Liquidation comes later, but it takes much more with it.
• Thinking you can’t lose anything in isolated margin. You lose that position’s whole margin.
• Raising the leverage so the trade “fits.” At 50x in isolated margin, a small price move liquidates you.
• Opening several cross margin positions without looking at the total: they all draw on the same balance.