Cross margin vs isolated margin
dYdX allows you to trade perpetuals with up to 20X leverage. Leverage is based on account equity. Depositing USDC collateral increases equity, as does an increase in the value of your positions.
Leverage enables you to buy contracts at a multiple of your trading collateral, increasing both your potential gain and the risk of loss.
dYdX employs a cross margin strategy, where all positions share the same collateral pool. Profitable positions offset losing positions, and the available leverage is based on the total equity in your account.
Initial margin is the minimum amount needed to open a new position. A decrease in the value of your positions or a withdrawal of collateral will reduce your margin. Your maintenance margin is the minimum amount needed to avoid a liquidation.
In contrast, isolated margin assigns specific collateral to each position and can be achieved on dYdX by creating separate accounts for each position.
Video glossary
Margin
The collateral deposited (equity) by a trader to secure a trade.
Leverage
Refers to the use of borrowed funds to increase the amount of a trade, allowing the trader to trade a larger quantity than their own trading collateral.
Initial Margin
The minimum amount needed to open a new position.
Maintenance Margin
The minimum amount needed to maintain a position and avoid liquidation.
Cross Margin
Multiple positions sharing the same collateral. This is the default for dYdX.
Isolated Margin
Assigning specific collateral to a given position. This can be accomplished on dYdX by using multiple accounts.
