Cross Margin
In the cross margin mode, all available balance in the contract account can be used as margin to prevent positions from being forcibly liquidated. The advantage of this mode is that as long as the leverage is moderate, the likelihood of liquidation is relatively low, making it often used for hedging. However, if a liquidation occurs, all assets in the contract account will be lost.
Isolated Margin
In the isolated margin mode, the margin allocated to a specific position is limited to a certain amount. If the margin for that position is insufficient to cover the floating losses, the position will be forcibly liquidated. Therefore, in situations with high volatility and large leverage, the isolated margin mode can lead to forced liquidation more easily, but the final loss is limited to the margin allocated to that position and does not affect the overall contract account balance.
Note: Switching between cross margin and isolated margin modes is not possible when there are open orders or existing positions.