Definition
Cross-Margin is a margin mode where all available funds in an account act as shared collateral across open positions. This structure can help prevent liquidation of a single position by utilizing total account equity.
However, losses in one position may impact the entire account balance.
Example in Context
A trader opens two leveraged positions under cross-margin. If one position moves against them, available equity from the account may help support the position before liquidation.
FAQs
How is cross-margin different from isolated margin?
Isolated margin limits collateral to a single position, while cross-margin shares collateral across positions.
Does cross-margin reduce risk?
It can reduce the likelihood of liquidation on one position, but it increases exposure across the full account.
Is cross-margin suitable for beginners?
Margin trading involves significant risk and may not be appropriate for all users.
Related Terms
- Isolated Margin
- Leverage
- Liquidation
- Margin Requirements
- Risk Management