Leverage

Overview

When opening a leveraged position, traders choose a margin mode. Margin mode determines how collateral is allocated and how liquidation risk is shared across positions.

Most platforms support two primary margin modes:

• Cross Margin (shared collateral)

• Isolated Margin (position-specific collateral)

Some platforms may also support additional variations, such as stricter isolated configurations or venue-specific rules.

Cross Margin

Cross margin uses a shared collateral pool across eligible positions.

This means:

• Available collateral can support multiple positions at once

• Profits from one position can help offset losses in another

• Capital usage is generally more efficient than isolated margin

Because collateral is shared, a liquidation event in one cross-margined position can affect the collateral available for other cross-margined positions.

Cross margin is often preferred when traders want:

• Maximum capital efficiency

• A shared risk budget across positions

• Flexibility to deploy unrealized PnL into new trades

Isolated Margin

Isolated margin assigns collateral to a specific position only.

This means:

• Risk is contained to that position’s allocated margin

• Liquidation of one isolated position does not directly impact other isolated positions

• Cross margin positions are not affected by isolated position liquidations (and vice versa)

Isolated margin is commonly used when traders want tighter risk control on individual trades. Isolated margin is often preferred when traders want:

• Clear per-position risk limits

• Separation between strategies

• More precise control over collateral allocation

Strict isolated modes (platform-specific)

Some platforms support a stricter version of isolated margin (sometimes called strict isolated).

In this mode:

• Margin is isolated to the position

• Manual margin removal may be restricted while the position is open

• Margin may be reduced automatically only as the position is closed

This design can help reduce operational or liquidation risk for certain assets or market structures.

Multi-venue or multi-DEX margin behavior

On platforms that support trading across multiple venues, DEXs, or execution layers, cross margin behavior may vary based on account structure.

Examples of platform-specific differences may include:

• Unified/portfolio-style accounts: positions on multiple venues that share the same collateral may also share margin

• Standard accounts: cross margin may apply only within the same venue/DEX

• No-cross mode: isolated-style margin with margin management enabled, but no shared collateral across positions

If your platform supports multiple execution venues, review the account abstraction or margin documentation carefully, since cross-margin scope may not be the same across all products.

Initial Margin and Leverage

Leverage is chosen when opening a position and must remain within the maximum allowed for that asset.

The margin required to open a position is generally: Initial Margin = Position Notional / Leverage

Where position notional is typically: Position Notional = Position Size × Mark Price (or another platform reference price)

Important behavior

• Initial margin is reserved for the position and cannot be freely withdrawn while it is supporting risk

• Higher leverage reduces initial margin required, but increases liquidation risk

• Maximum leverage varies by asset and may also vary by position size (tiered margin systems)

Adjusting margin after a position is opened

For cross margin positions:

• Collateral is shared at the account level

• Unrealized PnL may increase or reduce the margin available for other trades

• Adding collateral is typically done by funding the account (rather than assigning margin to one position)

For isolated margin positions:

• Traders can usually add margin to reduce liquidation risk

• Many platforms also allow removing margin, as long as margin requirements remain satisfied

• Unrealized PnL is generally retained within the isolated position unless withdrawn or transferred

Leverage after entry

Many platforms allow traders to adjust leverage settings for an existing position without closing it. However, leverage configuration and actual liquidation risk are not always the same thing.

In practice:

• Leverage limits are enforced when opening or increasing a position

• After the position is live, traders are responsible for monitoring risk

• If unrealized losses increase, effective leverage rises automatically

To manage rising leverage risk, traders can:

• Reduce or close part of the position

• Add margin (for isolated positions)

• Add collateral to the account (for cross margin positions)

Unrealized PnL and margin transfers

Unrealized PnL may be available for withdrawal or transfer, but most platforms require a minimum margin buffer to remain after any transfer.

A common rule is that remaining margin must still satisfy:

• The initial margin requirement, and

• A minimum account/position margin threshold (often based on total open notional)

In generalized form:

Transferable Margin is limited such that: Remaining Margin ≥ max(Initial Margin Required, Minimum Margin Buffer)

Where the minimum margin buffer may be set as a percentage of total open notional exposure.

What counts as a margin transfer

“Transferring margin” can include any action that removes collateral outside of normal trade execution, such as:

• Withdrawals

• Transfers to a spot wallet

• Removing margin from an isolated position

Maintenance margin

Maintenance margin is the minimum collateral required to keep a position open. If margin falls below this threshold, the position becomes eligible for liquidation. Maintenance margin is usually lower than initial margin and may depend on:

• Asset risk parameters

• Maximum leverage

• Position size tiers

Cross margin liquidation logic

For cross margin positions, liquidation is generally based on:

• Total account value (including unrealized PnL)

• Total maintenance margin requirement across open cross positions

If account value falls below required maintenance margin, one or more positions may be liquidated.

Isolated margin liquidation logic

For isolated positions, liquidation is based only on:

• The isolated collateral assigned to that position

• The maintenance margin required for that position

Other positions and collateral pools are not directly included in that isolated liquidation calculation.