Cross margin and isolated margin are the two ways a trading platform allocates collateral to your positions. With isolated margin, the maximum you can lose on a trade is the margin you assigned to that specific position. With cross margin, your entire account balance backs every open position, so profits and losses are shared across all of them. The choice changes how much of your account is at risk on any single trade.
Both are forms of margin trading, and both are available on most perpetual futures platforms, including those built on Hyperliquid. Picking the right mode is one of the simplest risk-management decisions you can make.
How Isolated Margin Works
In isolated margin mode, you allocate a fixed amount of collateral to each position. That margin is walled off from the rest of your balance.
- You open a long on SOL with $300 of isolated margin at 5x leverage, controlling $1,500 of exposure.
- If SOL falls far enough that your unrealized loss approaches $300, the position is liquidated.
- You lose the $300 you allocated — and nothing more. The rest of your account is untouched.
This makes isolated margin predictable. Your downside per trade is known the moment you open it, which is why it's the default choice for most traders and the safest way to control risk on a speculative position.
How Cross Margin Works
In cross margin mode, all of your available balance acts as shared collateral for every open position. If one trade starts losing, the platform automatically draws on your free balance — and on the unrealized profit of your other positions — to keep it alive.
- You have $2,000 in your account and three open positions.
- One position moves sharply against you. Instead of liquidating at a fixed margin amount, the system uses your whole balance to absorb the loss.
- This pushes the liquidation price further away for that trade — but it also means a single bad position can drain your entire account.
Cross margin gives a position more breathing room, but it removes the per-trade safety wall. The trade-off is wider survival on any one position in exchange for shared, account-wide risk.
The Core Risk Trade-Off
| Feature | Isolated margin | Cross margin | | ------------------ | --------------------------------- | ------------------------------ | | Max loss per trade | Capped at allocated margin | Up to your whole balance | | Liquidation buffer | Smaller (only that margin) | Larger (whole account) | | Risk isolation | Each trade is separate | All trades are linked | | Best for | Speculative, high-conviction bets | Hedged or correlated positions |
The headline difference: isolated margin limits how much one mistake can cost you, while cross margin spreads collateral to keep positions open longer at the cost of total exposure. Understanding this is central to whether you can lose more than you invest — with isolated margin on a well-built platform, your loss per trade is capped.
When to Use Which
Use isolated margin when:
- You're taking a directional, speculative position and want a hard cap on the downside.
- You're trading a volatile asset where a fast move could wipe out the margin.
- You want each trade's risk to be independent and easy to reason about.
Use cross margin when:
- You're running hedged positions that offset each other (e.g., a long and a short).
- You want to avoid an early liquidation on a position you have strong conviction in.
- You're actively monitoring the account and understand the whole balance is at stake.
For most traders, especially those starting out, isolated margin is the safer default. It turns risk management into a single decision made up front: how much am I willing to lose on this trade?
Start trading on Legend to set your margin mode per position and keep your downside defined before you enter.
Avoiding Liquidation in Either Mode
Whichever mode you choose, the principles for avoiding liquidation stay the same: use conservative leverage, set protective stops, and size positions so a single loss can't take you out. Margin mode controls how losses are absorbed — it doesn't change the discipline needed to survive volatile markets.