What is the difference between isolated margin and cross margin?
The concept of 'margin' is a key element in understanding leveraged trading and is essential for any beginner trader dealing with Futures.
📌 First: What is margin?
The margin is the amount you put as a 'guarantee' when opening a trade.
It is a small part of the total trade size, depending on the leverage.
✅ Quick example:
If you opened a trade worth 1000 dollars using 10x leverage
→ You only need a margin = 100 dollars
🧩 Second: Types of margin
1️⃣ Isolated Margin
• This margin is dedicated to this trade only
• In case of liquidation, only the trade is liquidated, without affecting the remaining balance
• Suitable for beginners and limited risks
✅ Example:
If you opened a trade with $50 margin, and it was liquidated, you will only lose the $50
The remaining balance in your wallet remains safe.
2️⃣ Cross Margin
• Your entire account balance is used to cover any losses
• If you lose a trade, your entire balance will be drawn to avoid liquidation
• Very risky if you are not a professional
❌ Example:
You entered a trade with $100 but your account has $1000
If the trade starts to lose… Binance may use your entire account to maintain it,
And if the losses continue, the entire account will be liquidated.
🛡️ Which one should I choose?
| Beginner? → | Use isolated margin 🔒 |
| Professional? → | You can use cross margin for flexibility ☠️ |
🧠 Golden tips:
• Do not use cross margin unless you fully understand market movements
• Always monitor the liquidation ratio
• Review your trade size compared to your balance
• Practice first with a demo account before entering with real money