Cross Margin
In simple terms
Imagine you have a single wallet where all your money is pooled together. With cross margin, any money you have can be used to support any of your trades, kind of like having one shared piggy bank for all your bets instead of separate ones for each bet.
Definition
All account funds are shared across open positions.
In depth
Cross margin is a risk management mode where all available collateral in a trader's account is aggregated into a single pool that backs all open positions simultaneously. When a position experiences a loss, the liquidation engine draws from this shared collateral pool rather than evaluating individual position solvency in isolation. This approach increases capital efficiency by allowing traders to maintain higher leverage across multiple positions, but it also increases systemic risk—a sharp adverse price movement across multiple correlated assets can rapidly deplete the shared collateral and trigger account-wide liquidation rather than closing just one position.
How does Cross Margin work?
In cross margin mode the exchange pools the entire available balance of a margin account as collateral behind every open position in that account. Unrealized profit on one position raises total equity and helps support the others, while unrealized loss draws that shared pool down. The platform sums the maintenance requirements of all positions and compares the total against account equity. Liquidation is therefore triggered at the account level rather than position by position, and the engine may close several positions at once to restore the account.
An example
A trader holds $4,000 in a single cross-margin account with two open positions, in illustrative figures. One shows a $600 unrealized loss and the other a $400 unrealized gain, so equity stands at $3,800 and both remain open. If the profitable position is closed and the losing one keeps falling, the shared cushion drains faster, because the remaining balance now supports that position alone.
Figures are illustrative only.
What beginners get wrong
- Cross margin exposes the whole account balance, so one oversized position can consume the collateral that was supporting every other trade.
- Gains on one position masking losses on another can hide how close an account actually sits to liquidation.
- Depositing extra funds into a cross-margin account increases the collateral behind existing positions instead of sitting safely to one side.
Related terms
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Educational only — not financial advice.