Cross vs isolated margin

Why this lesson exists

The Margin mode pill in OrderPanel has two settings. Most new traders pick one and never think about it again — and that's a mistake, because the choice changes where your liquidation price sits, how multiple positions interact, and whether one bad trade can take down the others.

This lesson explains the mechanical difference between Cross and Isolated, with worked numbers on a Standard ₹5L account, plus a rule of thumb for which to pick when.

The one-line definitions

• Isolated margin — the position can only lose the margin you explicitly allocated to it. Nothing else in your account is at risk from this position.
• Cross margin — the position can draw on your entire free balance to stay alive. Liquidation only happens when the whole account runs out.

The trade-off is symmetric: Cross gives the position more room before liquidation, but ties every position's fate to every other position's. Isolated puts a hard ceiling on what any one trade can cost you, at the cost of a closer liquidation.

How liquidation differs — a worked example

Standard ₹5L account. You open a 5× long on xBTC at ₹85,00,000, size 0.1 BTC.

• Notional: 0.1 × ₹85L = ₹8.5L
• Margin allocated: ₹8.5L / 5 = ₹1,70,000

Apply the long liquidation formula from Leverage, margin, and liquidation:

liq_price = entry × (1 − 1/leverage) = ₹85L × (1 − 0.2) = ₹68,00,000

That's the isolated liquidation price — the position dies if BTC trades at ₹68L, because at that point the ₹1.7L of margin is gone.

On cross, the same position is held against the entire ₹5L balance, not just the ₹1.7L allocation. The remaining ₹3.3L of free balance is available as additional cushion. The position now liquidates only when the entire account would be wiped, which on this single position happens far below ₹68L — call it the high ₹40Ls in this example.

The position still loses money tick by tick the same way. Cross just pushes the forced-close trigger further out.

Where the risk shifts

Isolated and Cross don't change your expected loss on a winning or losing trade — both close at the same exit price and produce the same P&L. What they change is the distribution of catastrophic outcomes.

• Isolated says: "this trade can lose up to ₹1,70,000 and not a rupee more, no matter what."
• Cross says: "this trade can stay alive longer, but if it does blow up, it takes the whole account with it."

If you have only one position on, Cross is almost always more capital-efficient — you're putting your full balance to work as cushion. If you have three positions on, Cross means a single bad one can liquidate the other two. That's the part most new traders miss.

A worked multi-position scenario

You're holding two positions on Cross:

1. Long 0.1 xBTC at ₹85L, 5× — margin used ₹1.7L
2. Long 1 xETH at ₹2,00,000, 5× — notional ₹2L, margin used ₹40,000

Free balance: ₹5L − ₹1.7L − ₹40,000 = ₹2,90,000

BTC dumps 8%. Your BTC position is now sitting on a ₹68,000 unrealised loss, your free balance has effectively dropped by that much, and your ETH liquidation price has moved closer too — because the free balance cushioning the ETH position has shrunk.

On Isolated, the same BTC dump leaves the ETH position completely untouched. The ETH liquidation price is whatever it was at entry, full stop.

This is the real argument for Isolated: it isolates not just margin but correlation. When markets move together (and crypto markets often do), Cross can liquidate multiple positions on a single bad move.

When to use each

Isolated is the right default when:

• You're testing a new strategy and want a hard cap on what it can cost.
• You have multiple positions on at once, especially correlated ones (xBTC + xETH + xSOL — all crypto, all moving together).
• You're early in an evaluation and want to keep risk-of-ruin firewalled per trade.

Cross is the right default when:

• You have only one position on and want the maximum cushion against being liquidated by noise.
• You're trading a single high-conviction setup and have already sized the position to your risk budget — see Position sizing.
• You're holding a swing position overnight and want noise-tolerance against thin-book wicks.

The professional default at evaluation level is Isolated for almost everything, Cross only for single-position high-conviction trades.

Margin mode and the rule floors

xtree's Maximum Loss Limit (MLL) doesn't care which margin mode you're in. Equity is equity, mid-mark drives the rule, and a breach is a breach.

But Cross can get you to that breach faster on a multi-position day. If three correlated positions all draw on the same free balance and the market moves the wrong way, your equity can fall through the MLL floor before any individual position has liquidated. Isolated wouldn't have saved you the P&L — but it would have made the damage path more legible, position by position.

A second worked example — single high-conviction trade

Compare the same setup, mode by mode. xETH at ₹2,00,000, you take a 10× long with 0.5 ETH. Notional ₹1,00,000, margin ₹10,000.

On Isolated, the position can lose up to ₹10,000 — at which point it's liquidated. The liquidation price is ₹2,00,000 × (1 − 1/10) = ₹1,80,000. A 10% adverse move closes the trade.

On Cross, with ₹4,90,000 free balance available as cushion, the position can absorb far more than ₹10,000 of unrealised loss before it forces. The effective liquidation price drops well below ₹1,80,000 — the exact level depends on what else is in your account, but the position survives noise that would have wicked the Isolated version out.

If your trade thesis takes 4 hours to play out and the next 30 minutes of noise can easily swing 8%, Cross is the right pick for this single position. The same choice would be wrong if you also had longs on xBTC and xSOL — because crypto correlation would mean a bad xETH move and a bad xBTC move arrive together, and Cross would let the xETH drawdown eat into the xBTC cushion.

Switching from Isolated to Cross — the workflow

There's no toggle. Steps:

1. Close the existing position from the Positions row in TradeBottomTabs.
2. Open the OrderPanel.
3. Tap the Margin mode pill and pick the new mode.
4. Re-enter the trade.

You will eat a round-trip in fees (entry + exit + entry again = 15 bps on notional). For a ₹8.5L notional, that's roughly ₹1,275. Worth knowing before you do it casually.

Recap

• Isolated caps the loss on a trade at the margin allocated; Cross lets the position draw on the full account.
• Same exit, same P&L. The difference is in catastrophic outcomes.
• Isolated firewalls positions from each other. Cross ties them together.
• Margin mode is set at order entry and can't be changed after fill on xtree.
• Default to Isolated for new strategies and multi-position days. Use Cross sparingly, on single high-conviction trades.

Next up: reading the dashboard and equity curve.

Test yourself

Next lesson: Reading your equity curve — the dashboard, drawdown math, and where the MLL/DLL counters live.