Cross Margin vs. Isolated Margin
Cross margin is a margin shared between your positions and backed by your entire wallet balance of the funding currency.
This margin method reduces the risk of liquidation. Any Realised P&L from other closed positions using the same funding currency can aid in adding margin on an opened losing position.
Cross Margin is an effective way to minimize the risks associated with your investment. This margin method is useful for users who are hedging existing positions, and also for arbitragers that do not wish to be exposed on one side of the trade in the event of a liquidation.
Isolated margin is the margin placed into a single position, and is isolated from other positions in your funding currency account balance.
Your available balance would NOT be automatically added to your existing isolated positions.
The maximum amount you would lose from liquidation is the margin you placed on the position, thus allowing you to manage each individual position’s risk better, compared to using the cross-margin method. When using Isolated Margin, you are able to adjust the amount of margin for each position.