Definition
Isolated Margin is a margin mode where a specific amount of capital is allocated to a single trading position. Losses are limited to the margin assigned to that position, rather than affecting the entire account balance.
This structure isolates risk on a per-position basis.
Example in Context
A trader allocates $500 in isolated margin to a leveraged position. If the position is liquidated, only the $500 allocated to that position is at risk.
FAQs
How is isolated margin different from cross-margin?
Isolated margin limits collateral to a single position, while cross-margin shares collateral across all open positions.
Does isolated margin reduce overall account risk?
It limits risk per position but does not eliminate market risk.
Can isolated margin be adjusted?
Many exchanges allow users to increase or decrease margin allocated to a position.
Related Terms
- Cross-Margin
- Leverage
- Liquidation
- Margin Requirements
- Risk Management