What are isolated margin trading and cross margin trading?

Cross margin and isolated margin are two margin models in cryptocurrency trading.

Cross Margin:

In cross margin, each position is backed by the entire available balance in the account. The account equity serves as collateral, and the unrealized profit or loss of one position can offset the losses or gains of other positions. Cross margin offers a more flexible risk management approach.

Isolated Margin:

Isolated margin allocates a specific amount of margin to each position, thus isolating the risk of each position. This helps prevent the entire account from being liquidated due to a loss in a single position. Traders need to manage the margin for each position separately, and the risk is limited to the margin allocated to that position.