Isolated margin is a margin mode where each trading position has its own dedicated collateral balance, limiting potential losses to only the amount allocated to that specific position.
When opening a position in isolated margin mode, a trader allocates a specific amount of capital as collateral for that position. This amount is separate from the rest of the account balance and from any other open positions. Each position has its own liquidation price, calculated based on the allocated margin, position size, and leverage.
For example, if a trader has an account balance of 2,000 USD and opens a position using only 100 USD as an isolated margin, the maximum loss on that position is limited to 100 USD. Even if the market moves unfavorably, the remaining 1,900 USD in the account is not at risk.
The allocated margin can be adjusted for open positions. If a position is approaching liquidation, a trader may add more margin to that specific position to prevent it from being closed. However, the margin mode itself (isolated or cross) generally cannot be changed after a position is already open, so it’s important to select the preferred mode before entering a trade.
Isolated margin is often compared to cross margin.
In cross margin mode, the entire available account balance is shared as collateral across all open positions. This means that profits from one position can help cover losses in another, and a single liquidation could potentially draw from the full account balance.
Isolated margin, by contrast, keeps each position self-contained. This can suit traders who want strict control over the downside of individual positions, particularly when taking higher-risk trades.
Cross margin can provide convenience for traders who prefer automatic coverage from their full balance, but it carries the risk of losing more capital if a position moves against them.
A summary of the key differences between isolated and cross margins:
Feature | Isolated Margin | Cross Margin |
Collateral | Strictly separated per trade | Full available balance is shared across all trades |
Loss ceiling | Only margin allocated to the specific position | Full account balance, including any profits from other trades |
Are other positions protected? | Yes | No |
Best suited for | Control over individual positions’ downsides; high-leverage and speculative or volatile trades | Convenience and automatic coverage across all open positions; long-term strategies or hedging |
When a trader's leveraged position is forcibly closed as a result of it not fulfilling the necessary margin...
Trading using borrowed funds - note: this is a high risk strategy and should only be done by experienced i...
Pledging something of value against a loan to guarantee that the person taking the loan will complete repay...
Binance Academy Editorial