Margin Trading: Isolated vs. Cross, and What Borrowing Actually Costs

The leverage product most beginners meet first, before futures — how margin borrowing, interest, and liquidation actually work, walked through on Kraken.

Draft status: needs a compliance pass and real product screenshots before it goes live — see the checklist below.

What it is

Margin trading lets you borrow funds from the exchange to increase your position size beyond what your own balance would allow, trading the asset itself rather than a derivative contract on top of it. This is the leverage product most people encounter before futures, because it sits directly on top of the spot trading they already understand — same asset, same order book, just borrowed size.

You pay interest on the borrowed amount for as long as the position stays open — this is different from a futures perpetual’s funding rate, which is exchanged between longs and shorts rather than paid to the exchange as a lender.

Isolated vs. cross margin

Isolated margin ring-fences a specific amount of collateral to one position. If that position is liquidated, you lose only what you allocated to it — the rest of your account balance is untouched.
Cross margin shares your entire margin balance across all open positions. This can absorb a temporary drawdown on one position using the account’s total balance, but it also means a large enough loss on one position can draw down funds you thought were unrelated to it.

For a first margin position, isolated margin makes the risk of any single trade easier to reason about — you know the exact ceiling on what that trade can cost you before you open it.

What liquidation actually depends on

Your liquidation price isn’t just a function of your leverage ratio — it moves with borrowing interest accruing against your position and with the maintenance margin requirement the exchange sets for that asset. Two positions opened at the same leverage on the same day can have different liquidation prices a week later purely because of accrued interest. This is why checking your current liquidation price periodically matters more with margin than with a simple spot holding.

Walkthrough: opening an isolated margin position on Kraken

Enable margin trading on your account if it isn’t already active — this typically requires a separate opt-in and may have its own verification step beyond standard KYC.
Select the trading pair and choose margin rather than spot as the order mode.
Choose isolated margin and set your leverage multiple.
Review the interest rate for the asset you’re borrowing before confirming — this is often shown per-hour or per-day and compounds for as long as the position is open.
Place the order, then check your liquidation price and margin level in your positions view — not just your unrealized profit or loss.
Monitor accrued interest if you hold the position for more than a few days — a position that looked fine on day one can have a meaningfully different liquidation price a week later.

Risk

Margin trading can lose you more than your deposited collateral, and interest accrues whether the trade is working or not — a position that’s technically “right” on direction can still be liquidated if it takes too long to move and interest erodes your margin. Read Position Sizing before opening a margin position for the first time. Nothing on this page is financial advice.

How this compares to futures

Margin trading borrows the actual asset; futures trade a contract referencing its price. See How to Trade BTC Perpetual Futures on Kraken for the derivative-contract version of leverage, and our Kraken vs. Bybit comparison for how the two platforms differ on margin and futures terms.

Editorial checklist before publish: verify current Kraken margin UI and interest-rate display against this flow · confirm maintenance margin language is accurate · compliance sign-off.