Does the Liquidation Process Differ between a Cross-Margin and an Isolated-Margin Position?
Yes, the process differs significantly. In an isolated-margin position, only the margin allocated to that specific trade is used, and only that position is liquidated.
In a cross-margin position, the exchange draws from the entire account balance to prevent liquidation. If the entire account equity falls below the maintenance margin, all cross-margin positions will be liquidated simultaneously.
Glossar
Account Equity
Balance ⎊ Account equity represents the total capital an investor holds within a trading account, encompassing both settled funds and the current market value of all open positions.
The Liquidation Process
Process ⎊ The liquidation process is the automated, irreversible sequence of events triggered when a leveraged position's collateral value falls below the minimum maintenance margin required by a derivatives or lending protocol.