What is isolated margin?
In one line: Isolated margin is a setting where only the money you assign to one leveraged trade backs it. If it's liquidated, the rest of your balance is untouched.
A simple example
You have $1,000 on a crypto exchange. You open a long trade with isolated margin and assign $100 to it, at 10x Leverage. That controls a $1,000 position.
A 10% move against you would wipe out the $100. In practice the exchange liquidates a bit before that, because it keeps a small maintenance buffer. Say around 9%.
If it happens, you lose roughly the $100. The other $900 stays safe.
Isolated vs cross
| Isolated margin | Cross margin | |
|---|---|---|
| Money backing the trade | Just what you assign | Your whole balance |
| Liquidation | Comes sooner | Further away |
| Worst case | That trade's margin | Much of the account |
See cross margin and our full isolated vs cross margin comparison.
Why it matters
Isolated margin puts a hard fence around one trade. It's a safety net if you forget a stop, or if price jumps.
But it's a blunt tool. At high leverage, Liquidation can sit very close to your entry. Normal price noise can close you out.
A common mistake
Treating the isolated margin as your stop. Losing your whole $100 isn't a plan. It's usually far more than 1% of the account, and it's set by leverage, not by the chart.
Use a real Stop loss placed beyond the last turning point. Size the trade so the stop costs about 1% of your account. Then check that liquidation sits well beyond your stop, using the crypto liquidation calculator.
How funding and leverage work on these contracts is in crypto leverage and perpetuals.
Questions
Is isolated margin safer?
It limits how much one trade can take from the account. It doesn't make the trade itself safer, and liquidation can come quickly at high leverage.
Can I add margin to an isolated position?
Many exchanges let you add more to move liquidation further away. That also raises what you can lose, so treat it as adding risk.
What happens to the rest of my balance if I'm liquidated?
With isolated margin, it isn't touched by that trade. You lose the margin assigned to the position, plus any fees.
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