Trading Academy · Module 3 — Market fundamentals · Lesson 2/6
Before your first leveraged trade, your exchange asks a quiet question with loud consequences: isolated or cross margin? One caps a bad trade's damage at its own stake. The other quietly signs your whole wallet as collateral for it.
Margin is the deposit backing a leveraged position — the cushion losses eat before the exchange force-closes you (lesson 1.2). The margin mode decides how big that cushion is allowed to get. Under isolated margin, each position has its own walled-off collateral: when the loss reaches that wall, the position is liquidated and the damage stops there. Under cross margin, every position draws on the entire futures wallet: a losing trade keeps pulling in your remaining balance — including the margin behind your other, healthy positions — and is only liquidated when there is nothing left to pull.
| Isolated | Cross | |
|---|---|---|
| Collateral behind one position | its own margin only | the whole wallet |
| Liquidation arrives | early, per position | late — after the wallet is drained |
| Worst case of ONE bad trade | that trade's margin | everything |
Cross feels efficient — positions "help each other out" and liquidations are rarer. That is exactly the trap: it converts many small, survivable failures into one rare, total one. The account that dies from a single trade is almost always a cross-margin account.
A fact about how this site's own signals are produced, stated as fact rather than advice: our system uses isolated margin on every position, without exception — cross has never been on its table. A single trade can cost its own margin; it can never consume the account.
The full lesson walks one losing trade through both modes with a worked hypothetical — same entry, same crash, a 4× difference in what it costs — covers why cross feels safer right up until it isn't, what a margin call means in each mode, and ends with an exercise tracing a trade of your own through both sets of rules.
Full lesson
The rest of this lesson — the worked examples, the exercises, and how our own system applies it — is included with any paid NoGuru subscription. Members receive a personal access link by Telegram DM; open it once and every lesson unlocks on this device.
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