ETA: Choosing Between Cross Margin and Isolated Margin – A Complete Guide to Margin Modes

Unified Trading Account (UTA) gives traders the ability to operate with three different margin modes, each designed for different trading styles and experience levels. Cross margin, isolated margin, and portfolio margin are three options that can be switched between depending on your strategy. By default, new users receive cross margin, but this is not always the optimal choice for every trader. Understanding the differences between these modes is critical for risk management and optimizing profitability.

Important note: the selected margin mode applies to the entire account as a whole. This means you cannot use cross margin for one trading pair and isolated margin for another simultaneously. The margin mode is a global setting that affects all your positions.

Three Margin Modes: Cross Margin, Isolated Margin, and Portfolio Margin

The UTA system offers three main margin options, each with its own characteristics and limitations.

Isolated Margin is a conservative approach where each position operates independently. Funds allocated to one position cannot be used to support another in adverse market movements. This mode is suitable for spot traders and beginner derivatives traders who want to control risk on each individual position.

Cross Margin (default mode) allows all assets in the account to work together to prevent liquidation. If one position incurs a loss, funds from other positions can be automatically used to maintain margin. This mode is more flexible and capital-efficient, enabling traders to better utilize portfolio liquidity. Cross margin supports a broader range of products, including spot margin trading and loans.

Portfolio Margin is an advanced mode for professional derivatives traders. Margin calculation here is based on the risk of the entire portfolio rather than individual positions. This means that if you have well-balanced hedged positions, the required margin can be significantly lower. However, access to this mode requires a minimum net capital of $1,000.

Cross Margin vs. Isolated Margin: Key Differences in Calculation and Requirements

Differences between cross margin and isolated margin manifest across all aspects of trading—from margin calculation to asset management and liquidation.

Margin Calculation:

• Isolated Margin is calculated per individual position. You decide how much funds to allocate to a specific position, and margin is computed based on that amount. This provides full control but requires more total capital to open multiple positions.
• Cross Margin calculates margin based on the entire account balance. The system considers the aggregate P&L of all positions and uses all available free capital to maintain margin. This requires less funds but carries higher risk.

Supported Products: Isolated margin works only with spot and USDT/USDC perpetual contracts. Cross margin supports a wider set: spot margin trading, perpetual contracts, futures, inverse contracts, and USDC options. This makes cross margin preferable for traders working with various instrument types.

Asset Mode:

• Isolated Margin operates in a single-asset mode: USDT can only be used for USDT contracts, USDC only for USDC contracts.
• Cross Margin uses a multi-asset mode, where all assets are converted into USD. For example, BTC can be used as collateral for USDT perpetual contracts.

Leverage Management: In isolated margin mode, you can set different leverage levels for long and short positions, providing flexibility in risk management per position. When switching to cross margin, the system automatically synchronizes leverage—hedged positions should use the same leverage.

Liquidation Triggers: Isolated margin is liquidated when the mark price of a specific position hits its liquidation price. Cross margin is only liquidated when the overall maintenance margin of the entire account reaches 100%. This means you have more opportunities to recover before liquidation in cross margin mode.

Margin Trading and Borrowing Capabilities

Spot margin trading, P&L offset, and unrealized profit utilization have key differences:

• Isolated Margin does not support spot margin trading, does not allow offsetting losses on derivatives, and does not permit using unrealized profits to open new positions.
• Cross Margin supports all these features but does not support automatic margin top-up.
• Portfolio Margin also supports these functions and is intended for more complex strategies.

How to Switch Between Margin Modes: Conditions and Procedures

Switching between margin modes is not instantaneous. The system sets certain conditions for a safe transition.

Switching from cross margin or portfolio margin to isolated margin:

First, you must close all options positions and orders, disable spot margin trading, and repay all existing loans. It is critical that you have enough assets to cover the increased margin requirements in isolated mode. The mark price of existing positions must not be worse than the liquidation price after switching. After successful switching, spot margin trading remains disabled, and automatic margin top-up will be disabled by default.

Switching from isolated or portfolio margin to cross margin:

The main requirement is that the initial margin rate after switching must not exceed 100%. After a successful switch, the system will automatically enable spot margin trading. If your positions use different leverage levels, the system will synchronize to the lowest value.

Switching to portfolio margin:

This is the most strict transition. It requires an initial margin rate ≤ 100%, no open hedge orders, and a minimum net capital of $1,000. After switching, spot margin trading will be enabled by default.

Choosing the Right Mode: Recommendations for Different Traders

For beginner spot traders: Isolated margin provides better control and prevents unforeseen losses. Each position operates independently, reducing the risk of systemic portfolio collapse.

For active traders with multiple positions: Cross margin is ideal due to capital efficiency. It allows the use of shared funds and supports a broader range of instruments.

For professionals with hedged portfolios: Portfolio margin optimizes margin based on the entire portfolio, potentially reducing required capital with properly structured positions.

Choosing between cross margin and isolated margin is a balance between flexibility and safety. Start by analyzing your trading strategy, position volume, and risk tolerance to determine the optimal mode for your account.