Cross Margin

Margin shared across all positions in a trader’s account to cover losses.

What is Cross Margin?

Cross margin on a Perp DEX allows a trader to use all available funds in their account as collateral to support multiple open positions, reducing the likelihood of individual position liquidations. For example, on dYdX, if a trader has $5,000 in their account and opens several perpetual swap positions, the entire balance can be used to cover losses across all trades, unlike isolated margin.

This approach increases flexibility but also risk, as a significant loss in one position could deplete the entire account, leading to multiple liquidations. Cross margin is managed by smart contracts, which automatically allocate funds to maintain positions based on market conditions. Traders must monitor their overall margin health to avoid total account liquidation.