Cross Margin

Cross margin mode pools the entire account balance as shared collateral for all open positions. When one position generates unrealized losses, the account balance — including unrealized profits from other positions — absorbs those losses before the exchange triggers liquidation. This shared buffer makes it significantly harder to liquidate any individual position compared to isolated margin mode, where each position is ring-fenced with its own margin allocation. The primary use case for cross margin is hedging strategies with structurally offsetting positions. In a basis trade, for example, the long spot leg profits when price rises while the short perpetual leg loses — and vice versa. Because the two legs move in opposite directions, the cross margin pool is rarely stressed: gains on one leg largely offset losses on the other. The combined position needs cross margin to function correctly, because an isolated short leg would be liquidated by rising price even though the overall position is hedged. The critical risk of cross margin is the total account exposure it creates. If a position moves catastrophically — a 40% adverse move against a large leveraged position — the losses draw down the entire account balance, potentially liquidating every position in the account, including profitable ones. This scenario is the mechanism behind some of the most dramatic retail account wipeouts in crypto history: a single large position in cross margin mode consuming the full account before the trader can respond. The J13 framework recommends cross margin exclusively for delta-neutral strategies — basis trades and similar hedging structures where offsetting positions create a natural balance. Retail traders running directional speculative positions should use isolated margin, which bounds the maximum loss per trade to the assigned margin and protects the rest of the account regardless of how far price moves.