Margin mode where your whole account balance backs every position, so profits on one offset losses on another and liquidation is account-wide.
Cross margin is capital-efficient. A hedged book needs less collateral because gains and losses net, and a position near trouble is automatically supported by free balance rather than closed.
The cost is that nothing is ring-fenced. One bad position can consume the entire account, and the liquidation, when it comes, takes everything rather than one trade. Traders who assume a single position's loss is capped by its own margin are describing isolated-margin, not this.
Implementations differ by venue: some cross only within an asset or a contract group, others across the whole account including spot balances. Knowing which applies decides whether an unrelated position can take your entire balance with it.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.
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