Cross margin is a margin mode that uses your entire account balance as collateral for all open positions. When one position moves against you, the exchange draws from your full balance to prevent liquidation. When another position is profitable, those gains help support losing trades.
This shared-balance approach means your account operates as a single pool of collateral. Cross margin is the default setting on BitMEX. All new positions use cross margin unless you manually switch to isolated margin.
The trade-off is straightforward: cross margin provides stronger liquidation protection, but a large loss on a single position can drain your entire account.
How Does Cross Margin Work?
When you use cross margin, three mechanisms govern how your collateral is managed.
Margin is shared. Your entire account balance acts as collateral for all open positions. No funds are isolated for individual trades.
Liquidation risk spans the account. Your entire account is at risk of liquidation if the combined losses of all positions exceed your total account balance. All cross margin positions for an account are liquidated at the same time.
PnL sharing operates across positions. Unrealised profits from one position can offset losses from another. A profitable long on XBTUSD can support a losing short on ETHUSD, provided both use cross margin and settle in the same cryptocurrency.
This interconnected approach makes cross margin most effective when managing multiple positions simultaneously.
How Does Cross Margin Compare to Isolated Margin?
There are two margin modes under Single Asset Margining on BitMEX. The core difference is the scope of risk.
Cross margin uses your entire account balance as collateral for all open positions. Gains and losses are shared across trades. Liquidation affects all cross margin positions at once.
Isolated margin restricts the margin to a specific position. Potential losses are limited to the initial margin set for that trade. If one position is liquidated, the rest of your account balance remains protected.
Cross margin favours capital efficiency and multi-position strategies. Isolated margin favours risk containment on individual trades.
What Are the Benefits of Cross Margin?
Cross margin delivers two primary advantages for derivatives traders.
Liquidation prevention. Cross margin can help prevent the liquidation of individual positions. Profitable positions offset losses from losing ones, providing a larger buffer before the liquidation threshold is reached.
Capital efficiency. Cross margin allows you to utilise your entire account balance as collateral. This frees up funds that would otherwise be held as isolated margin for each position. You can open more positions or larger positions without needing to allocate margin separately.
What Are the Risks of Cross Margin?
The primary risk of cross margin is total account liquidation. A large loss in one position can lead to the liquidation of your entire account, because all cross margin positions share the same collateral pool.
In a sharp market move, losses on a single trade can consume the margin supporting other positions. This cascading effect means one bad trade can wipe out gains from profitable positions.
Traders who use cross margin should monitor their total account exposure and maintain sufficient balance to absorb adverse price movements across all open positions.
When Should You Use Cross Margin?
Cross margin is best suited for experienced traders who meet three criteria.
- They have a diversified portfolio of trades that they are actively hedging.
- They want to maximise capital efficiency across multiple positions.
- They are comfortable with the risk of losing their entire account balance.
If you hold multiple offsetting positions, such as a long and a short on correlated assets, cross margin allows profits from one to support the other. For speculative trades with high directional risk, isolated margin is the safer choice.