Isolated margin
Also called: isolated mode · isolated margin mode
Definition
Isolated margin is a margin mode where each position has its own separate collateral, so a liquidation can only take the margin assigned to that position.
How isolated margin works
When you open a trade in isolated mode, you choose how much margin to commit. That amount alone backs the position. If the trade goes badly and hits its liquidation price, you lose that margin, but the rest of your futures balance is untouched.
This makes risk easy to see and cap, which is why many beginners prefer it. The trade-off is that the position cannot draw on your spare balance in a sharp move, so its liquidation price is closer than it would be in cross margin with the same total funds. You can manually add margin to an isolated position to push the liquidation price further away.
Isolated margin is useful when you hold several unrelated trades and do not want one to endanger the others. Exchanges let you switch modes, but usually only when you have no open position or orders on that contract, and some unified accounts handle modes differently.
Example
Suppose your futures account holds 5,000 USDT. You open an isolated 10x long on a small token with 400 USDT of margin, a 4,000 USDT position. The token falls roughly 10% and the position is liquidated. You lose roughly the 400 USDT, but 4,600 USDT stays in your account. In cross mode the same position could have kept drawing on the whole 5,000 USDT as the price fell further.
Common mistakes
- Thinking isolated margin cannot be liquidated, when it is often liquidated sooner than cross.
- Adding margin repeatedly to an isolated position, which removes the cap it was meant to give.
- Forgetting to check which mode is active before opening a trade.
Learn and practise
FAQ
Is isolated or cross margin better?
Isolated caps the loss on each position, which is easier to control. Cross gives positions more room by sharing your balance, but one bad trade can affect everything.
Can I add margin to an isolated position?
Yes. Adding margin moves the liquidation price further from the current price, but it also increases what you can lose on that trade.