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What is isolated margin?
Isolated margin is a setting on leveraged trading platforms where each position has its own separate pot of collateral. If that position is liquidated, you lose the margin assigned to it, but the rest of your account balance is not used to keep it open.
What it means for you
Isolated margin caps what one bad trade can take: the collateral you assigned to it. The flip side is that a small cushion means a smaller price move can liquidate the position, even while you have free funds elsewhere in the account. Check which mode a platform uses by default before you open a leveraged trade.
How it works
On perpetual futures exchanges, margin can be applied on an isolated basis, with collateral posted separately for positions in different assets, or under cross-margining, where collateral is pooled and liquidation decisions become coupled. Under isolated margin each position stands alone: when its own equity falls to the maintenance level, it is closed. When available margin and other loss-absorbing resources cannot cover losses after a large price move, exchanges reduce other traders' positions and share the losses through rule-based auto-deleveraging.
An example
Say your account holds $1,000 and you open a leveraged trade with $100 of isolated margin. If the price moves against you far enough, that position is liquidated and you lose the $100; the other $900 stays untouched.
Sources: Campbell, Hey, Moallemi and Nutz: Risk-Based Auto-Deleveraging (arXiv), CFTC Glossary · checked 4 October 2026
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Educational content, not financial advice. Written by hand and checked against the source named above. Something wrong? Tell us and we reply within two business days.