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Quantitative Finance · Glossary

What is Isolated margin, cross margin?

Also known as: isolated margin · cross margin

Definition 18.1 Markets III: Commodities, Energy and Crypto · Chapter 18 — Margin, Liquidation and Loss Allocation

Under isolated margin each position has its own margin, assigned by the trader; its losses can consume only that margin, and it is liquidated alone. Under cross margin all positions of an account share the account’s collateral; gains on one support losses on another, and the account is liquidated when its total equity falls below the sum of its maintenance margins.

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