What are cross and isolated margin trading offered by the broker, pls, explain to the newbie? 🤓

asked by Akmaner D. on 1/23/24

3 Answers
Thumbnail of user luiza34

Understanding margin is one of the most complex things for trades, so don't worry if you didn't get its specifics at first. I will try to simplify it for you.
Those are two different approaches to managing positions, or in general, managing the whole margin on your account. The Cross margin, as its name suggests, is when the whole margin available on your trading account is shared across all of your open positions. The approach is suitable for those with a higher risk appetite since in this case tha platform is using the whole available margin to maintain the positions.
On the flip side, the isolated margin allows you to allocate a specific amount of margin to each open position. This means that you can limit the margin that one position can use from your account, and limit the exposure. Isolated margin is a great tool in risk management, and it is used by those who like more conservative approach to trading.

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Thumbnail of user sabant

Okay, I have just learned this topic myself so until the knowledge is fresh I can explain it to you:)
Isolated margin is when you allocate some part of your deposit just for one position, for example a position on ETH. In this case the rest of your deposit stays intact in case something goes in the wrong direction.
It's the way of protecting your funds and not to put all your eggs in one basket.

Cross margin is in the contrary, when you can use all your equity in leveraged crypto trading.
It's riskier, or sure. But at the same time it is more profitable.

Which one to choose strongly depends on the trader. So now it's your move

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Thumbnail of user seifm4

Its super easy. Cross margin trading is athe margin trading method where you as a trader use your entire account balance as collateral for their open positions. In other words, all the funds in your account are available to cover potential losses in your trades if they go wrong. You can trade larger positions and you avoid liquidation more. With this but its riskier, you can lose all your account potentially.
Isolated margin is where you commit a certain amount to the trade and that is the whole budget for the trade. You cannot lose more. You limit your potential losses. But you're going to need to trade smaller positions because your budget is smaller. So you have a higher risk of liqudation in the case of volatility.

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