Clear DefinitionsCross Margin
1 min read
Pronunciation
[kraws mar-jin]
Analogy
Like using the combined value of all assets in your brokerage account to support margin on any single trade.
Definition
A margin trading mode where a trader’s entire account equity is used to collateralize positions across multiple markets or instruments, sharing margin across positions.
Key Points Intro
Cross margin pools risk and collateral across positions to reduce likelihood of individual liquidations.
Key Points
Unified collateral: All positions draw from same equity pool.
Risk offset: Profits in one position can offset losses in another.
Liquidation threshold: Based on aggregate account health factor.
Leverage flexibility: Dynamic allocation across instruments.
Example
A futures trader holds long BTC and short ETH in cross margin mode; gains on ETH short help maintain margin for BTC position.
Technical Deep Dive
Exchange calculates maintenance margin = max_i(required_i) across positions. Unrealized P&L updates equity in real time. Liquidator bots monitor health; `liquidate(account)` triggers when equity maintenance.
Security Warning
Extreme volatility in one instrument can still trigger full account liquidation; monitor aggregate risk closely.
Caveat
Cross margin increases systemic risk by tying all positions together; use only with diversified strategies.
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