What Is Isolated Margin?
Isolated margin dedicates a specific amount of collateral to each individual position. If the position is liquidated, only the assigned margin is lost — the rest of your account balance remains untouched.
How Isolated Margin Works
If you open a $5,000 position with $500 isolated margin (10x leverage), your maximum loss is limited to that $500. Even if you're liquidated, the remaining $9,500 in your account is safe. The trade-off is a tighter liquidation price compared to cross margin.
Why It Matters for Traders
Isolated margin is the safer default for most traders. It enforces position-level risk management — you pre-commit to your maximum loss before entering. This prevents the catastrophic scenario where a single trade cascades through your entire account.