Isolated margin assigns a defined amount of collateral to an individual position. Its margin sufficiency is assessed separately from a shared cross-margin pool, according to the venue’s account design.
How the allocation works
Suppose a trader allocates 100 USDT to one isolated position while keeping other funds outside that allocation. Losses reduce the support available to that position. An unused balance elsewhere does not necessarily prevent its liquidation.
Adding another 50 USDT would increase the assigned collateral to 150 USDT before other changes. This does not change the position’s quantity or erase its loss. It changes the amount supporting the existing exposure.
Limits of isolation
The practical boundary depends on the rules and settings. Automatic margin replenishment, if enabled and supported, may transfer additional funds into the position. Manual additions also increase the capital exposed. Consequently, the original allocation should not be treated as an unconditional lifetime loss cap.
Check the liquidation trigger, eligible collateral, treatment of fees and funding, and whether opposite positions share any calculations. Isolated margin helps separate position management, but leverage, price gaps and execution rules still determine how a distressed position is closed.