How Does a Liquidation under Cross Margin Affect the Initial Margin of Other Positions?
A liquidation under Cross Margin uses the entire account balance as collateral. When one position is liquidated, the funds used to cover the loss are drawn from the shared margin pool.
This reduction in the shared pool effectively reduces the available margin for all other open positions, potentially bringing their individual equity closer to their liquidation price. It increases the risk of a cascade of liquidations across the entire account.
