Cross Margin or Isolated Margin: How Each Mode Protects (or Exposes) Your Balance

Anyone who trades with leverage sooner or later comes across the choice between cross margin and isolated margin. The difference may sound technical, but it defines something very concrete: how much of your balance a single bad trade can take with it.

First, what is margin?

Margin is the part of your balance that is reserved as collateral while a leveraged position is open. With 1:50 leverage, for example, a US$ 5,000 position requires US$ 100 in margin. The rest of the exposure is "borrowed" through leverage, but the result, positive or negative, is calculated on the US$ 5,000.

The question these two modes answer is: if that position starts losing, where does the money to cover the loss come from?

Isolated margin

With isolated margin, each position has its own reserve, separate from the rest of the account. If the trade moves against you, the maximum loss on that position is limited to the margin you allocated to it. When that margin runs out, the position is closed, and the rest of the balance is not touched.

Advantage: the risk of each trade is known from the moment you enter. One bad trade does not contaminate the others.

Disadvantage: because the position only has its own reserve to rely on, it may be closed during a price swing that the total balance could easily have withstood.

Cross margin

With cross margin, all open positions share the account's available balance. A losing position can use free margin to remain open, and the profit from one position helps support another.

Advantage: positions have more room to get through price swings.

Disadvantage: a single very bad trade can consume the free margin of the entire account and cause all positions to be closed at the same time.

An example with numbers

Balance of US$ 1,000. Two open positions, each with US$ 100 in margin.

With isolated margin: position A moves sharply against you and loses its US$ 100 of margin. It is closed. Position B remains open, and the balance falls to US$ 900. The loss was limited to what had been reserved.

With cross margin: the same position A remains open using the free balance as it loses. If the price comes back, great: it survived a swing that isolated margin would not have withstood. If it does not come back and the loss reaches US$ 800, the account runs out of free margin and both positions may be closed together.

The point is that cross margin trades predictability for staying power. Neither one is better in absolute terms.

Margin level and stop out

Two terms always come up with this subject:

• Margin level: the account equity (balance plus the result of open positions) divided by the margin in use, expressed as a percentage. The lower it is, the closer you are to the limit.
• Stop out: the level at which the broker starts closing positions automatically to prevent the balance from becoming negative. The exact percentage is set out in each broker's rules.

With cross margin, it is this account-wide level that matters. With isolated margin, each position has its own.

When each mode makes sense

• Isolated margin for those who are starting out with leverage, for trades that are unrelated to each other, and for testing a strategy with fixed risk per trade.
• Cross margin for those who monitor positions closely and understand that the entire balance is at stake, for example in positions that hedge each other.

In either mode, the stop remains the main protection tool. The margin mode defines what happens when there is no stop or when it is not respected.

How it works at Safirion

Before trading with leverage at Safirion, it is worth reading the Margin Trading Policy, available in the website footer. That is where you will find the platform's margin and position closing rules. And if you want to see in practice how margin behaves, you can open the same positions in the demo account and track the margin level without risking money.

Risk warning: Trading leveraged products involves a significant risk of loss and may not be suitable for all investors. Leverage amplifies gains and losses in the same proportion. Trade only with capital you can afford to lose.