Every leveraged position needs collateral behind it. The margin mode decides which collateral that is.
- Isolated margin: each position has its own margin. If it gets liquidated, the loss is generally confined to that margin. The rest of your balance does not support the position.
- Cross margin: the eligible collateral in your margin account is shared across every open position. A losing position can draw on all of it before it gets liquidated.
Neither mode is safer in every case. Isolated margin caps the collateral committed to one trade, but with a small allocation it gets liquidated sooner. Cross margin can give a position more room, but it also puts more of the account behind that position's losses. The examples below make that trade-off concrete.
Isolated Margin: A Worked Example
Say you have $1,000 in your account. You open a BTC long with $200 of margin at 10x. That is a $2,000 position.
Under isolated margin, only that $200 backs the trade. The other $800 is not touched.
To keep the math simple, assume the venue liquidates once losses and fees reach 85% of the position's margin, and ignore fees for now. (Thresholds vary by venue and by market. This one matches most pairs on LeverUp.)
- 85% of $200 = $170 of loss before liquidation
- $170 ÷ $2,000 notional = an 8.5% move against you
If BTC falls about 8.5%, the position is liquidated. The $800 you kept outside the position is untouched. Most of the $200 is gone. How much of the remainder comes back depends on the venue's liquidation charges and settlement rules. Real fees make the move to liquidation slightly smaller than 8.5%.
What this mode gets right: the collateral committed to the trade is explicit before you enter. Final losses beyond that collateral in extreme conditions depend on the venue's liquidation and deficit-handling rules.
What it costs you: the liquidation price is close. At 10x, a single-digit move can close the position, even when you have more money in the account that could have kept it open.
Cross Margin: The Same Trade
Same account, same $2,000 BTC long. This time the whole $1,000 balance backs it (assuming all of it is eligible collateral in the same margin account).
Cross-margin venues usually liquidate when your account equity falls below the maintenance margin, a small fraction of your open notional. For this example, assume maintenance margin is 0.5% of notional, which is $10.
- The position can lose about $1,000 − $10 = $990 before liquidation
- $990 ÷ $2,000 = roughly a 49.5% move against you, before fees
That is much more room than 8.5%. But if the move does happen, you lose nearly the whole $1,000.
The two examples use different liquidation rules, so the percentages don't come from margin mode alone. Under the same 0.5% maintenance rule, the isolated position would be liquidated after about $190 of loss, a 9.5% move. So most of the gap comes from how much collateral stands behind the position: $200 versus $1,000.
What this mode gets right: with more shared collateral available, short-term swings are less likely to liquidate the position, and profits on one position can support margin on another. Losses elsewhere in the account shrink that buffer.
What it costs you: the worst case is most of the account, and the liquidation price keeps moving. Every deposit, withdrawal, new position, and change in unrealized PnL shifts it.
Side by Side
| Isolated margin | Cross margin | |
|---|---|---|
| Collateral backing a position | That position's margin only | Eligible collateral across the margin account |
| Collateral exposed to one position | Generally the posted margin | Up to most of the account |
| Distance to liquidation (same size) | Depends on margin allocated | Usually longer if spare balance is available |
| Liquidation price | Moves with fees, collateral value, and margin changes | Also moves with balance and other positions |
| Positions share margin | No (orders may merge into one position) | Yes |
| Hands-on management | Add margin manually if needed | Automatic, but easy to lose track of |
How Multiple Positions Interact
The difference grows once you have more than one position open.
Say you hold an ETH long and a SOL short under cross margin. If ETH rallies and SOL rallies too, the profit on ETH offsets the loss on SOL. The shared balance absorbs the net result. For hedged or related positions, that can be useful.
It works the other way too. If ETH and SOL both move against you, the two losses stack against the same balance. The positions that are doing fine lose their buffer to the ones that aren't. A position you considered safe can end up closed because a different trade went wrong. Losses on one position can reduce shared equity enough to trigger liquidation of the others. (At the market level, forced selling can feed on itself too; see liquidation cascades.)
Under isolated margin, each position stands alone. The SOL short can be liquidated while the ETH long keeps its own margin.
When Each Mode Tends to Fit
These are general patterns, not rules. Position size and exit plans matter at least as much as the mode you choose.
Isolated margin tends to fit when:
- You are newer to leverage and want a clear amount of collateral committed per trade
- You are taking a directional bet on a volatile asset
- You run several unrelated trades and don't want one to drag the others down
- You use higher leverage, where one mistake would otherwise hit the whole account
Cross margin tends to fit when:
- You run hedged or offsetting positions, such as a long/short pair across related assets
- You actively monitor the account and know your total exposure
- You want to avoid liquidation from short-term noise, and you have deliberately sized the account for that
A common mistake is using cross margin with a large idle balance and treating the extra room as free safety. The extra collateral can lower the chance of liquidation, but it also puts more of the account behind that position's losses. If you size a cross-margin trade as though only $200 is at risk, the rest of the account is still exposed.
Margin Mode Doesn't Replace a Stop-Loss
Margin mode decides which collateral supports a position. It does not decide where you should exit.
With isolated margin, the liquidation price often ends up working as your stop. That is an expensive way to exit, because you have already lost most of the margin and paid the liquidation charge.
With cross margin, going without a stop means the account balance is the only thing standing between one position and a much larger loss.
Either way, a planned stop-loss addresses a different part of risk than the margin mode does. See How to Set Stop-Loss and Take-Profit on LeverUp for a practical walkthrough. Stops also have limits: in fast or gapping markets, the fill can be worse than the trigger price.
How Margin Works on LeverUp
On LeverUp, margin is set per position, so each position works much like isolated margin:
- Each position has its own margin and its own liquidation price. A position is liquidated once losses and fees reach the pair's liquidation loss rate: 80% on the high-leverage pairs and on MON, LIT, ZEC, and XMR, and 85% on most other pairs. Check the current parameters before trading.
- You can add margin to an open position to move its liquidation price further away, or remove margin, within the pair's leverage limits.
- Opening again in the same direction, on the same pair, with the same margin token adds to the existing position. Long and short on the same pair stay separate.
- Positions using different margin tokens are accounted for separately and do not share margin. For example, an LVUSD-margined position and an LVMON-margined position each stand on their own collateral.
If you use a volatile token as collateral through AnyCollateral, the collateral's own price also moves your effective leverage. Keep an eye on both. The full formulas are in How Liquidations Work on LeverUp and the LeverUp liquidation docs.
FAQ
Is cross margin or isolated margin better for beginners? Isolated margin is usually easier to reason about, because the collateral committed to each trade is set when you open it.
Can isolated margin lose more than the margin I posted? In normal conditions, the loss is generally confined to the posted margin. Whether losses can ever exceed posted collateral depends on each venue's deficit-handling rules, so read its documentation.
Why did my liquidation price change under cross margin when I didn't touch the position? Under cross margin, the liquidation price depends on your whole account. Unrealized PnL on other positions, new trades, and withdrawals all move it.
Does adding margin to an isolated position lower my leverage? Yes. More margin on the same notional means lower effective leverage and a liquidation price further from entry. On LeverUp, a position whose effective leverage falls below 1x is closed automatically through auto-deleveraging, so don't over-collateralize.
Is cross margin the same as portfolio margin? Not quite. Portfolio margin is a more advanced form of shared margin that assesses the combined risk of your positions and may recognize eligible offsets, subject to the venue's model and minimum requirements.
This article is for education only and is not financial advice. The examples are hypothetical and simplified. Thresholds, fees, and liquidation rules differ by venue and change over time, so check the current documentation before you trade.