Let’s imagine two rooms.
In Isolated Margin, a fire is limited by the funds allocated to a specific position. Additional margin isn’t automatically pulled from other positions of the same type.
In Cross Margin, multiple positions share the available balance. Profit from one can support another, but the losing position has access to a wider pool of funds.
So Cross isn’t “safer,” and Isolated isn’t “better” by default. It’s a different risk-distribution architecture.
Before TradFi Perp, I would decide: do I want to cap the maximum loss in a single trade, or consciously manage a shared margin pool for the portfolio?
The margin mode should be chosen before opening the position—not after the market has already moved against it.
In Isolated Margin, a fire is limited by the funds allocated to a specific position. Additional margin isn’t automatically pulled from other positions of the same type.
In Cross Margin, multiple positions share the available balance. Profit from one can support another, but the losing position has access to a wider pool of funds.
So Cross isn’t “safer,” and Isolated isn’t “better” by default. It’s a different risk-distribution architecture.
Before TradFi Perp, I would decide: do I want to cap the maximum loss in a single trade, or consciously manage a shared margin pool for the portfolio?
The margin mode should be chosen before opening the position—not after the market has already moved against it.