Isolated margin is a margin trading mode where the collateral and any borrowed funds are assigned to a single position, rather than shared across your entire margin account. If the trade moves against you, only the margin allocated to that position is at risk of liquidation, helping ring-fence losses.
How isolated margin works
When you open a leveraged trade in isolated margin mode, the exchange sets aside a specific amount of your funds as that position’s margin. Your liquidation price is based on that allocated margin, the size of the position, and the maintenance margin requirements of the platform. If losses erode the position’s margin below the required threshold, the exchange can liquidate that position to prevent the account from going negative.
In practice, this acts like guardrails around one trade. For example, if you go long ETH/USDT using isolated margin and the market moves down sharply, the isolated position may be liquidated, but other funds in your margin wallet are not automatically pulled in to support it.
Isolated margin vs cross margin
Cross margin pools collateral across positions, so profits or spare collateral in your account can help keep a losing trade open. That can reduce the chance of liquidation, but it also increases the blast radius, because a single adverse move can consume more of your account’s total margin.
Isolated margin limits that spillover risk, which can be useful for speculative trades or when you want to cap the maximum loss on a specific idea. The tradeoff is flexibility, you cannot rely on the rest of your account balance to rescue the position unless you manually add margin.
Understanding isolated margin matters because it is a core risk management tool in leveraged crypto trading, shaping how losses are contained, liquidations occur, and capital is allocated across strategies.