How Does ‘Margin’ Requirement Differ between an Isolated Margin and a Cross Margin Account?
In an isolated margin account, the margin dedicated to a specific position is restricted to a fixed amount, meaning only that margin is at risk of liquidation. This limits the loss for that position but also prevents other funds from being automatically used to prevent liquidation.
In a cross margin account, all available funds in the account are used as margin for all open positions. This spreads the risk across the entire portfolio, reducing the chance of a single position being liquidated, but placing the entire account balance at risk.
