Clear DefinitionsIsolated Margin
1 min read
Pronunciation
[ahy-suh-lay-tid mar-jin]
Analogy
Like having separate security deposits for each rental property—you cannot lose more than that deposit per property.
Definition
A margin mode where each trading position has its own dedicated collateral allocation and risk is contained to that position; losses do not affect other positions’ collateral.
Key Points Intro
Isolated margin confines risk to individual positions, preventing cross‑position contagion.
Key Points
Per‑position collateral: Each position draws only from its own margin.
Liquidation: Only that position is liquidated when margin falls below maintenance.
Leverage control: Traders set leverage per position.
Risk isolation: Profitable positions unaffected by others’ losses.
Example
A trader opens a 5× leveraged BTC long in isolated margin with 1 BTC collateral; if the position nears liquidation, only that 1 BTC is at risk.
Technical Deep Dive
Exchange backend maintains margin ledger: `isolatedCollateral[positionId]`. On price update, health = collateral × LTV − unrealizedLoss. If health maintenance, triggers `liquidate(positionId)` without touching other accounts.
Security Warning
High leverage in isolated margin can still lead to full loss of position collateral; monitor health closely.
Caveat
Isolated margin limits flexibility of capital usage compared to cross margin.
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