# Cross Margin vs Isolated Margin

Cross-margin uses your entire account balance as collateral for all positions, maximizing capital efficiency.

## How It Works

Your total account balance serves as collateral for all open positions, allowing you to:

* Share margin across all positions
* Maximize capital efficiency
* Offset losses with profits from other positions

## Benefits

**Capital Efficiency:** Use your entire account balance for trading **Risk Management:** Profits in one position can offset losses in others **Flexibility:** Easy to manage multiple positions with shared margin **Lower Requirements:** Reduced total margin needed across portfolio

## Cross-Margin vs Isolated Margin

| Feature                | Cross-Margin                | Isolated Margin            |
| ---------------------- | --------------------------- | -------------------------- |
| **Collateral**         | Shared across all positions | Separate for each position |
| **Risk**               | Portfolio-wide              | Individual position        |
| **Liquidation**        | All positions at risk       | Only specific position     |
| **Capital Efficiency** | High                        | Lower                      |

## Risk Management

**Monitor Portfolio Risk:** Track overall account exposure and position correlations **Position Sizing:** Limit individual position risk and avoid over-concentration **Stop Losses:** Use stop-losses for individual positions **Diversification:** Spread risk across different markets

## Best Practices

* Set maximum position sizes
* Monitor portfolio risk regularly
* Diversify across uncorrelated markets
* Use proper position sizing methods
* Monitor total account equity

## Next Steps

* [**How to Use Cross-Margin**](https://github.com/Polynomial-Protocol/gitbook/blob/master/explanation/how-to/trading.md) - Practical implementation
* [**Risk Management Guide**](https://github.com/Polynomial-Protocol/gitbook/blob/master/explanation/explanation/debt-mechanism.md) - Protect your capital
* [**Multi-Collateral Trading**](https://github.com/Polynomial-Protocol/gitbook/blob/master/explanation/explanation/multi-collateral.md) - Asset diversification