How to choose between cross margin and isolated margin: a complete guide to margin modes in ETA

Unified Trading Account (UTA) offers three margin modes, each designed for different trading styles. The two main modes—cross margin and isolated margin—differ significantly in their logic, requirements, and risks. If you’re new to margin trading, it’s important to understand how cross margin differs from isolated margin before choosing a mode for your account.

The Three Margin Modes in UTA and Their Main Features

UTA supports three modes: isolated margin (IM), cross margin (CM), and portfolio margin (PM). By default, the system uses cross margin, but each trader can select the mode that best fits their trading strategy. It is critically important to remember that the selected margin mode applies to the entire account—it’s not possible to use isolated margin for one trading pair and cross margin for another simultaneously.

The first group of traders—spot and traditional margin traders—most often operate in isolated margin mode. The second group, including more experienced spot and derivatives traders, prefers cross margin. The third group—professional derivatives traders with a minimum capital of $1,000—use portfolio margin, which provides the most flexible risk management.

Key Differences Between Cross Margin and Isolated Margin

What exactly distinguishes cross margin from isolated margin? The answer lies in how your capital is allocated and used. In isolated margin mode, each position is managed independently with its own pool of funds. If you open a long position on BTC with 10x leverage, the allocated margin is used only for that position. If the position is liquidated, only the margin allocated to that specific trade is lost.

In cross margin mode, a completely different principle applies. Your entire account capital functions as a single collateral pool for all open positions. If you have both long and short positions simultaneously, they can partially offset each other, reducing the overall margin consumption. This means that unprofitable positions are helped by profitable ones, as long as the overall portfolio margin ratio remains acceptable.

Margin requirements work differently in these modes. In isolated margin mode, margin rates are not applied at the account level—each position is calculated independently. In cross margin mode, the system tracks two rates: initial margin (IMR) and maintenance margin (MMR). Liquidation in cross margin occurs when the maintenance margin ratio reaches 100%, not at a specific price point as in isolated margin mode.

Which Products Are Supported by Each Margin Mode

Isolated margin mode is limited to spot trading, perpetual contracts in USDT, USDC contracts, and futures. Cross margin expands capabilities, supporting spot margin trading, perpetual contracts in USDT and USDC, futures, inverse contracts, and even USDC options. Portfolio margin supports nearly all the same instruments as cross margin, with one difference—positions are calculated based on the risk of the entire portfolio, potentially reducing margin requirements through good diversification and hedging.

Asset support also differs between these modes. In isolated margin mode, the “one asset” principle applies—USDT can only be used for USDT contracts, and USDC only for USDC contracts. In cross margin and portfolio margin modes, all collateral assets are converted into USD, allowing, for example, BTC to be used as collateral for trading USDT perpetual contracts.

The Liquidation Mechanism: Why It’s Critically Important

The difference in the liquidation mechanism is one of the most significant distinctions between modes. In isolated margin mode, liquidation occurs when the mark price reaches a specific liquidation price for the position. This means you know exactly at what price liquidation will happen, and this price is clearly displayed in the system interface.

In cross margin mode, liquidation occurs when the maintenance margin ratio reaches 100%. The displayed liquidation price in this mode is only approximate and informational, as the actual trigger depends on the dynamics of all your positions simultaneously. This complicates prediction but offers more flexibility to use profits from some positions to support others.

Margin rates work differently in these modes. In isolated margin mode, margin rates are not applied at the account level—each position is calculated separately. In cross margin mode, the system monitors two rates: initial margin (IMR) and maintenance margin (MMR). Liquidation in cross margin occurs when the maintenance margin ratio hits 100%, not at a specific price.

Which Products Are Supported by Each Margin Mode

Isolated margin mode is limited to spot trading and perpetual contracts in USDT, as well as USDC and futures contracts. Cross margin expands support to spot margin trading, perpetual contracts in USDT and USDC, futures, inverse contracts, and USDC options. Portfolio margin supports almost all the same instruments as cross margin, with the key difference that positions are calculated based on the risk of the entire portfolio, potentially reducing margin requirements with good diversification and hedging.

Asset support also varies. In isolated margin mode, the “one asset” principle applies—USDT can only be used for USDT contracts, and USDC only for USDC contracts. In cross margin and portfolio margin modes, all collateral assets are converted into USD, enabling, for example, BTC to be used as collateral for USDT perpetual trading.

The Liquidation Mechanism: Why It’s Critically Important

The liquidation mechanism is one of the most important differences. In isolated margin mode, liquidation triggers when the mark price hits a specific liquidation price for the position. You know exactly at what price liquidation will occur, and this is clearly shown in the interface.

In cross margin mode, liquidation occurs when the maintenance margin ratio reaches 100%. The displayed liquidation price is only approximate and informational, as the actual trigger depends on the combined dynamics of all your positions. This makes prediction more complex but allows more flexibility in using profits from some positions to support others.

Practical Recommendations for Choosing a Mode

If you prefer a conservative approach and want clear control over risk for each individual position, isolated margin mode is ideal. Traders who frequently open opposite positions (longs and shorts simultaneously) for hedging or arbitrage benefit significantly from cross margin, as positions offset each other.

Cross margin mode provides automatic margin replenishment if the balance falls below the required level. Isolated margin mode also supports automatic margin replenishment but requires more discipline in managing margin for each position separately. If you plan to use unrealized profits from some contracts to open new positions, choose cross margin or portfolio margin—in isolated margin mode, this is not possible.

Switching Between Modes: Conditions and Requirements

Switching from cross margin to isolated margin requires meeting strict conditions. Your account must not have active options positions, spot margin trades, or loans. There must be sufficient assets to support increased margin for each position, and the mark prices of current positions must not be worse than the estimated liquidation prices after switching. After a successful switch, spot margin trading and automatic margin replenishment are disabled by default.

Switching back from isolated margin to cross margin requires that the initial margin ratio after switching does not exceed 100%. Upon successful switching, spot margin trading is enabled by default, and the system will set leverage based on more conservative settings if long and short positions previously used different leverage in IM mode.

Switching to portfolio margin has an additional requirement—the initial margin ratio must not exceed 100%, and in hedging mode, there must be no active positions or orders. This mode requires a minimum capital of $1,000 and is intended for more experienced traders who need maximum flexibility in calculating margin based on overall portfolio risk.