Cross and isolated margin
When a leveraged position loses money, can it take collateral from the rest of your account, or only from what you posted?
In plain words
Margin is the collateral posted to back a leveraged position. In isolated margin, only the collateral assigned to the position can absorb its losses, leaving the rest of the account untouched. In cross margin, the whole account balance can back that position, so a losing trade can draw on collateral held for other positions.
Why it matters
The choice sets how a loss propagates. Isolated margin caps the damage to a single position, at the price of an earlier liquidation. Cross margin postpones liquidation but lets one losing position erode collateral supporting others, so several positions can fail together after one bad move.
In a real week: ETH, week of 17 September 2018
In the week of 17 September 2018, ETH ranged 32.6%, with a weekly low of 192.40 at 20:00 UTC on Monday and a worst daily return of -10.93%, before closing the week at 244.50 for a gain of 11.02%. A long entered near the open at 220.24 would have been deeply underwater by Monday's low. Under isolated margin only that position's own posted collateral would have been at risk; under cross margin the account's other collateral could have been drawn down to keep it open.
A common mistake
Assuming cross margin is safer because it delays liquidation. It spreads the risk instead of containing it, so one losing position can consume collateral set aside for entirely separate positions.