Season 1Episode 212:05
Isolated margin: putting one trade in its own box
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Key takeaways
Isolated margin gives one position its own margin.
The margin you assigned can still be lost; isolated is not a stop-loss.
Auto-add or manual adding puts more of your money behind the same risk.
Quick check
You turn on auto-add margin for an isolated position. What changes?
Try it yourself
Find the auto-add margin switch in the practice settings, and explain why it changes the money carrying the risk.
Show the answer
Automatic or manual adding increases the margin committed. You can't promise unconditionally to lose only the initial amount.
Transcript
- Sam
If I put 100 in isolated, the other 900 can never be touched?
- Nexubo
Isolated margin means a position gets its own margin. In a simple setup, with no adding and no auto-add, this position's liquidation risk is mainly carried by the margin you assigned.
- Narrator
So it helps you separate the margin of different positions. But that 100 can still be lost. Isolated margin doesn't make losses disappear, and it isn't a stop-loss order.
- Nexubo
Watch this switch. Some platforms offer auto-add margin. Turn it on, and your available balance can keep flowing into the position. Adding margin by hand does the same. More money ends up carrying the risk.
- Narrator
Don't see the word 'isolated' and assume the most you can lose is always that first 100. Check the add-margin settings, the fees and the product rules.
- Sam
No.
- Nexubo
With isolated margin, look at the walls, and also at any pipes plugged into the box.
- Narrator
One position leaks, and another one starts sinking. Next: cross margin.
- Narrator
Understand first, then act.